Toronto Real Estate Market Reports

Toronto Office Market Report

Downtown Toronto office vacancy hit 14.0% at mid-2025, up slightly from 13.8% the quarter previous but down from a year ago after peaking at 14.8% in the third quarter of 2024. Absorption in the first six months of the year totalled ~960k sf, the most absorption recorded in the first half in Toronto’s downtown office market since 2017 despite high economic volatility. Leasing activity in the Financial Core led all downtown submarkets at mid-2025 with U.S. tariff threats and the associated economic uncertainty seeming to have little impact on activity. The delta between availability and vacancy in the Financial Core tightened to 380 basis points at mid-2025, the smallest gap between the two indicators since the third quarter of 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. With no large net new tenants making (pre) lease announcements in the Downtown core in the first half of 2025, vacancy, while declining, will remain elevated due to significant amounts of obsolete backfill space not being occupied. Four of five of Canada’s ‘Big Five’ banks – BMO, Scotiabank, RBC and TD Bank - all announced new return to office policies commencing in the back half of 2025 that will have employees back in the office at least four days per week, After 5+ years of rising vacancy and availability due to anemic leasing and an exodus of tenants, both Downtown North and East are increasingly likely to be subject to an intensification of redevelopment and/or demolition of dated inventory. With phase two of CIBC Square the last large office tower under construction downtown, the ongoing pressure from tenant demand for trophy space may lead to an announcement of a new development, which would be a first since pre-COVID.

Toronto Industrial Market Report

GTA industrial vacancy was 2.8% at the first quarter of 2025, up notably from the 2.1% recorded at the start of 2024. Regional vacancy was less than 2% from mid-2017 through 2023. Leasing activity in the first quarter of 2025 was slowed by a sense of unease and economic uncertainty unrelated to commercial real estate, but to the threat of U.S. tariffs. Despite substantial absorption, sublease availability remained elevated in the first quarter of 2025 as tenants limited costs with U.S. tariff threats 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 6.8%, followed by Durham (4.9%). York was the tightest submarket (1.5%) followed by Toronto at 1.8%. Peel sat at 2.6%. More than 9.1 msf was under construction in the GTA in the first quarter of 2025, a drop from the 10.5 msf under construction at the start of 2024 and notably down from 16.7 msf at the start of 2023. Estimated asking rates peaked mid-2023 and had been in decline, but rental rate growth returned in Toronto and Halton while rates stabilized in Peel and York. Rates fell in Durham. 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 ~$1.4B for GTA industrial assets in the first quarter of 2025 was the most in the past decade outside of the Covid-inflated first-quarter sales volumes recorded in 2021-23