Toronto's downtown is in serious trouble as office vacancies spiral out of control

The vitality of downtown Toronto faces a serious threat as the city's office market continues to struggle.

According to a new report from Colliers, 12 per cent of downtown Toronto's offices were empty at the end of the first quarter of 2024 — a 1.2 per cent increase in vacancies from one year earlier.

This 12 per cent figure is not quite as shocking as CBRE's vacancy figures which show a shocking 18 per cent of offices in the city's core sat vacant during the first quarter of 2024, but still representative of a concerning decline.

Toronto's downtown in major trouble as office vacancy soars to worrying new heights https://t.co/YHRGr9Kr8o

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Colliers reports that the spike in office vacancy was especially pronounced with Class B spaces located in the city's Financial District. On a more positive note, vacancies for the more sought-after prime office spaces have continued to decline.

The Financial District proper now sits 12.8 per cent vacant, while the hardest-hit area of the city centre is the downtown west submarket, where vacancies now soar to 14.5 per cent.

In total, a staggering 10,462,978 square feet of office space now sits vacant in the heart of Toronto.

Spiking vacancies in the downtown area are only part of a broader trend across the Greater Toronto Area, where office vacancy has climbed 110 basis points since Q1 2023 and now totals an eyebrow-raising figure nearing 30 million square feet of vacancy across the market.

The midtown Toronto office market's vacancies have also skyrocketed since the first quarter of 2023, jumping from 9.8 per cent in Q1 2023 to 15.7 per cent at the close of Q1 2024.

Colliers notes that landlords are getting creative in their bids to draw employees back to in-person work environments, and are rolling out enhanced amenities to stay competitive.

As for the months to come, Colliers expects that if inflation maintains its current track, vacancy rates may begin to decrease towards the end of this quarter.