The first quarter saw no new office supply
Canada’s downtown office vacancy rate saw a slight improvement in the first quarter of this year, marking the first change since the pandemic began.
According to CBRE Group Inc., the rate decreased to 19.9%, down from a record high of 20% in the previous quarter.
The report pointed out that despite ongoing trade tensions and tariffs, major Canadian cities such as Toronto and Vancouver saw declines in their vacancy rates. However, BNN Bloomberg noted that the overall office market remains uncertain, with the full effects of trade issues expected to unfold in the coming months.
One key development in the first quarter was the absence of new office supply entering downtown markets, which has been a major factor driving vacancy rates higher in recent years. At the same time, approximately 400,000 square feet of office space was removed from the market for conversion or demolition, contributing to the slight decrease in vacancy rates.
The broader context for Canada’s office market is shaped by recent trends observed in the second quarter of 2024. According to CBRE data last July, Canadian office vacancies saw a slight increase, reaching a national vacancy rate of 18.5%.
While the downtown vacancy rate showed some improvement, the combined rate for both downtown and suburban office spaces remained stable at 18.7%, unchanged from the previous quarter. This rate has been relatively consistent in recent months, reflecting the broader trends in the commercial real estate sector.
BNN Bloomberg also reported the industrial real estate market’s performance, which, although still impacted by trade tariffs, demonstrated solid net absorption in the first quarter. This indicates that demand for industrial space remains steady, despite the ongoing challenges faced by the sector.
Looking ahead, the commercial real estate market remains in a state of flux, with the future direction largely dependent on how trade tensions evolve.
As BNN Bloomberg reported, it may take another quarter before the full impact of these issues becomes evident in market data.
