Looking for office space? Well, you’re in luck. There’s a lot of it on the market right now.
Driving the news: The office vacancy rate in Canada rose to a record high last quarter per a Morguard report, with ~2.7 million square feet of vacant office space re-entering the market.
- Of those 2.7 million square feet of newly vacant office space, 2.4 million of it was located in Toronto, which saw both downtown and suburban offices hollow out.
Why it’s happening: Morguard gave BNNBloomberg two main reasons for the office retreat: Remote work and economic anxiety. Due to these factors, companies are taking a wait and see approach, delaying lease decisions until they get a clearer picture of what they need.
Zoom out: The office space exodus is an international trend. A recent survey of 350 major multinationals found that around half of them plan to reduce the amount of office space they have in the next three years, with most aiming to reduce space by 10-20%.
Why it matters: Empty offices act as a bellwether for broader economic turmoil and can also contribute to it by hurting retailers and restaurants reliant on worker foot traffic. They also spell trouble for investors with heavy office real estate exposure, like pension funds.
Yes, but: Collier’s President and CEO Brian Rosen told The Peak the current sitch is “not cause for panic” but part of a transition from a landlord’s market to more of a tenant’s one.—QH