Class A or B: Evolution in tenant preferences on display
The urban/suburban divide has continued to play out between the Classes with different factors rising to the top of tenants’ decision-making process.
As has been the case, downtown tenants have sought out quality, well-amenitized spaces to keep their employee base engaged in returning to the office. The result of this comes into clear view when comparing current Class A and B vacancy to Q1 2020, with Class B rising two times as much as A over the course of eleven quarters. Downtown Class A vacancy, while elevated due to delivery of new supply, remains at healthy levels in several markets, including Ottawa (8.9%), Vancouver (10.4%) and Toronto (12.0%).
Suburban tenants meanwhile have prioritized other factors such as greater flexibility that can be afforded with shorter commute times. In fact, suburban Class B vacancy now sits slightly lower than A, further proving that while quality helps differentiate product, it isn’t the sole driving force behind space decisions for all segments of the workforce.