Toronto Real Estate Market Reports

Toronto Office Market Report

Downtown Toronto office vacancy slid to 13.7% at the first quarter of 2025, marking the second consecutive decline in downtown vacancy since peaking at 14.8% in the third quarter of 2024. Absorption was positive to start the year with ~784k sf recorded in the first quarter of 2025, the most absorption in a first quarter in Toronto’s downtown office market since 2000. While leasing activity in the Financial Core led all downtown submarkets, vacancy remained elevated even as it declined quarter-over-quarter for the first time since the first half of 2023. Return to office has proceeded at a slower pace in Downtown Toronto than in most other Canadian metros and remains a consideration for occupiers as the trend continues to linger. Tenants are still seeking out model suites of all sizes, particularly in well-located and recently constructed class A premises in Downtown South and the Financial Core with landlords increasingly accepting the fit-out costs to lease the space. With no large net new tenants making (pre) lease announcements in the Downtown core in 2025, vacancy, while stabilizing, will remain elevated due to two factors: i) lack of new supply and ii) obsolete backfill space not being occupied. Renewals and deals in new or near-new class A space remain key leasing drivers in Downtown Toronto, particularly in the Financial Core and Downtown South submarkets, as tenants seek proximity to the public transit hub at Union Station. After more than two years of rising vacancy related to anemic leasing in 2024 and a tenant exodus in 2023, Downtown West is showing signs of recovery in the first quarter of 2025 with vacancy declining due to the second most absorption in the core. With class A rents continuing to diverge from class B/C rents downtown, inducements such TIs, delayed term and free rent, particularly outside the Financial Core and Downtown South, are often necessary to get deals done.

Toronto Industrial Market Report

GTA industrial vacancy rose to 3.1% at the end of 2024, the most vacancy recorded in the GTA since early 2015. Regional vacancy was less than 2% from mid-2017 through 2023. GTA industrial leasing in 2024 was muted with little speculative leasing, but the activity that occurred has been very balanced among consumer goods and third-party logistics tenants. Sublease space availability spiked to its highest level since 2016 at the end of 2024 as tenants right-size and limit costs with U.S. tariff threats looming on the horizon threatening growth in 2025. Rental rate differentiation among submarkets increasingly impacting tenant decisions as occupiers in softer submarkets such as Durham and Halton renew at favourable rates. Halton had the highest industrial vacancy rate in the GTA at 6.4%, followed by Durham (4.9%) and Peel (3.1%). Toronto was the tightest submarket (2.1%) followed by York at 2.2%. Almost 10.1 msf was under construction in the GTA at the end of 2024, a drop from the 11.6 msf under construction at the end of 2023 and a massive decline from 18.5 msf at the end of 2022. Estimated asking rates peaked at mid-2023 and have been declining since with rents in Peel and Durham down the most in the past 12 months. Rents only rose in York Region in 2024. Heightened uncertainty generated by threats of U.S. tariffs and their subsequent economic impact has also generated a more favourable environment for those tenants willing to transact. Sale proceeds of $5.6B for GTA industrial assets in 2024 were the fourth highest in history following the extraordinary dollar volumes of 2021 ($7.8B), 2022 ($7.6B) and 2023 ($10.5B).