- What Newmark is optimistic about the downtown Toronto office market
- Why Absorption was up in the final quarter of 2024
- What next Class-A and -B assets are stabilizing
Downtown Toronto’s office market may stabilize in 2025, Newmark said in a report to be released today, pointing to an upswing in absorption as a reason for optimism.
In the final quarter of 2024, downtown Toronto saw a net absorption of 330,000 sq ft, the firm said, with a total inventory of 86m sq ft.
Toronto’s downtown is the core of Canada’s largest office market. It saw a historically high level of leasing activity throughout most of 2024, with the second quarter being the year’s one rough patch.
Although the city’s office vacancy rate hit 14.9% at the end of 2024 — the second-highest vacancy rate recorded since 2000 — the figure also marked the first quarter-over-quarter decline since 2019.
Vacancy rates varied within the regions of downtown Toronto. Downtown West, mostly made up of Class-B and -C buildings, had the highest rate at 21.4%, while Downtown South, which has nearly all Class-A buildings, had the lowest at 8.1%.
Class-A head-lease space has been the most attractive kind of property to tenants. Increases to Class-A vacancy have started to slow, and both Class-A and -B assets have stabilized after the chaos of the pandemic, Newmark said.
Office sales picked up in 2024 as well, with H&R REIT’s $232m sale of 25 Dockside Drive to George Brown College and Halmont Properties in Q2 setting the benchmark for the year.
Other significant transactions included the $65m sale of 70 York Street and the $21m sale of 51 Yonge Street.
The total sales volume for downtown Toronto’s core in 2024 was $694m, down from 2023’s $1.6bn.
