Canada’s Office Markets Are Doing Better Than You Think

July 12, 2022 3 Minute Read

Q2 2022 Office stats

Canadian office markets gained momentum in the second quarter, performing better than many expected.

Fresh from CBRE’s just-released Q2 2022 Office Figures report, here are five things to know about how office markets fared in the last quarter.

  1. Vancouver is the big winner so far in 2022. Vacancy dropped to 6.4% in Q2, the second quarter in a row Vancouver has seen vacancy fall. Suburban office was in particularly high demand, with tech users leasing large blocks of space. Half of all Canadian markets reported decreased vacancy downtown in Q2, including Halifax (-80 bps), Montreal (-20 bps), Ottawa (-20 bps), and Waterloo Region (-10 bps).
  2. Suburbs are where it’s at. The national suburban office vacancy rate is now 90 basis points below the national downtown vacancy rate of 16.9%, a trend never before seen in  Canadian commercial real estate. Seven out of 10 Canadian markets recorded tightening suburban vacancy in Q2. This could be a sign of some increased desire for drive-to workplaces with good public transit accessibility.
  3. Toronto’s office market is split. Class A buildings in Toronto have outperformed lower-quality or older-aged space, with an average vacancy rate 6.3% lower than Class B. This speaks to the fact that occupiers see highly personalized space with quality amenities as a way to offset the drawback of a commute downtown for their employees.
  4. Sublet space keeps declining. The amount of sublet space available nationally now sits at 14.3 million sq. ft., the lowest level since Q4 2020. Subleases account for 17.9% of total vacancy, or 3.0% of total existing office inventory. Businesses are reclaiming sublet offerings as they prepare for employees to return to the office. It is expected that subletting will continue to decrease, with quality built-out sublet spaces in especially high demand amid surging fit-out costs.
  5. The office is still a thing! CBRE Canada Vice Chairman Paul Morassutti has a message for doomsayers: “it is increasingly clear that office real estate still has a core purpose and value to businesses, or else we would see a far worse dynamic playing itself out by now.” Canadian office markets are still trying to find their footing in the new world of hybrid work, and economic instability is adding to the challenges facing businesses but vacancy is relatively stable and markets are largely balanced.


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