How did the GTA office market perform as 2022 drew to a close?
1/28/2023 | Posted in Commercial Real Estate by Jessi Sandhu | Back to Main Blog Page
The Greater Toronto Area office market saw its vacancy reach double-digit levels during Q4 2022 amid markedly increased caution among stakeholders, who are still awaiting clarity on workplace strategies and external economic factors, according to Avison Young.
“Remote and hybrid workplace strategies, along with layoffs in the technology sector and external economic concerns, continued to contribute to the evolution of market fundamentals as the year came to a close,” Avison Young said in its latest market report.
The overall GTA downtown office vacancy rate stood at 10%, far higher than the 2.1% level seen just before the pandemic during Q1 2020.
Avison Young added that 208 of the region’s buildings had more than 50,000 square feet available during the quarter, up from 181 a year prior.
“Many occupiers are still assessing their office space needs in light of hybrid workplace strategies and the ongoing return-to-office process, deferring decisions when they can and hedging their bets with shorter lease terms to allow future flexibility,” Avison Young said.
The combination of persistent inflation, elevated interest rates, and the looming threat of recession is likely to keep market players on a defensive posture for a prolonged period.
“The tech sector, a source of strong demand during its growth phase of the past several years, has recently begun to experience staff reductions – and in some cases, space reductions – even among large global firms,” Avison Young said.
Source: Canadian Mortgage Professional
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