Toronto Real Estate Market Reports

Toronto Office Market Report

Downtown Toronto office vacancy slid to 13.4% at third-quarter 2025, down from 14.0% the quarter previous and from 14.6% a year ago after peaking at 14.8% in the third quarter of 2024. Despite economic uncertainty, absorption in the first nine months of the year totalled ~1.45 msf, the most absorption recorded in the downtown office market since third-quarter 2022. Leasing activity in the Financial Core led all downtown submarkets at the end of the third quarter of 2025 due to a push from Canada’s ‘Big 5’ banks to implement return-to-office mandates. The delta between availability and vacancy in the Financial Core tightened to 330 basis points at third-quarter 2025, the smallest gap between the two indicators since mid-2020. Overall sublease vacancy continued to decline downtown due in large part to the tightening of sublease vacancy in class B/C properties, one of the only sources of leasing activity occurring outside of class A assets. Overall vacancy, while declining, will remain elevated until the significant amounts of obsolete office space in fringe downtown submarkets, particularly Downtown North and East, are repurposed, redeveloped or demolished. While tenants have largely remained drawn to the well-connected, central submarkets of Downtown South and the Financial Core, an increasing fight for quality may force tenants to choose between location and quality of space. This competition to secure quality space may result in tenants having to consider other submarkets (such as Downtown West, North and East) in order to secure trophy or class A space, a predisposition that appears to already be in play. With phase two of CIBC Square the last large office tower under construction downtown and mostly preleased, the ongoing pressure from tenant demand for trophy space may lead to an announcement of a new development in early 2026.

Toronto Industrial Market Report

GTA industrial vacancy was 3.2% at third-quarter 2025, up slightly from the 3.0% recorded a year earlier and virtually unchanged from the 3.1% recorded the previous quarter. Heightened leasing velocity through third-quarter 2025 saw the prior sense of economic unease and uncertainty related to the threat of U.S. tariffs exceeded by a need to move forward. While sublease availability in third-quarter 2025 declined by 25% when compared with the record high set at mid-2025, more than 5.6 msf remained available, primarily in Peel region. Rent differentiation among submarkets impacting tenant decisions as occupiers seek lower rents as the floor for headlease rates is being softened by competitive sublease space. Halton had the highest industrial vacancy rate in the GTA at 7.7%, followed by Durham (5.0%). York was the tightest submarket (1.8%) followed by Toronto at 2.6%. Peel sat at 2.9%. More than 11.4 msf was under construction in the GTA at third-quarter 2025, an increase from the 9.8 msf under construction a year earlier and up from 10.9 msf in the previous quarter. The evolving transformation of GTA’s post-Covid industrial market is highlighting regional resiliency as demand remained robust in the face of challenging macroeconomic indicators. Tenants with strong covenants are better positioned to secure better lease rates and concessions from landlords, while tenants without such finances offered less favourable terms. Sale proceeds of ~$4.1B for GTA industrial assets at the third quarter of 2025 was virtually unchanged from the same period in 2024, which was the lowest total since the first nine months of 2020.