Monthly Blog- Dec 2025
Jasen Leith
A 3-hour flight traveling due north from Houston we start our journey on a warm, plus 17 degrees Celsius day. Crossing over the plains of the USA, then halfway in we start to see the border of winter, as we quickly cross into a real snowscape. We touch down to a mix of snow mounds and exposed brown grass, and the captain enthusiastically welcomes us to a minus 10 degrees Celsius environment.
This dynamic country is well versed on keeping warm in this minus temperature, and I think it gets as low as minus 25 degrees Celsius, so I am not complaining too much on this trip. I am in Toronto looking at the office market.
In terms of status, Toronto has long been the heart of Canada's largest city and metropolitan area, serving as the region and country's business, financial, cultural and entertainment hub. Increasingly recognized as a global city.
Home to major corporations, a burgeoning technology sector, world-renowned education and cultural institutions, and key transit networks, downtown Toronto plays a crucial role in shaping the city's identity and global standing.
The office market in Toronto is Canada's biggest office market which has seen a surge in demand following the global pandemic. More than five years after Toronto’s bustling business hub underwent a drastic transformation of remote work, and a deserted downtown, its office market has gradually arrived to a turning point and is now surpassing other Canadian cities.
Toronto’s biggest office tenants, such as the banks, the government and insurance and tech companies, have been aggressively pushing employees to come back to the office full-time. Demand for office space was led by Royal Bank of Canada, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Wealthsimple Inc., Bank of Nova Scotia, Stripe, Inc., and Mastercard Foundation.
Toronto has not seen any meaningful new construction activity in 2024 or 2025 and so that effectively means the city has almost exhausted its trophy office offerings.
In respect of new construction for the coming years development activity Is not likely to complete until 2030 or 2031, at the earliest.
The Downtown area comprises five districts: North (subject Property's location) South, East and West. In addition to these four, is the Financial Core
Typically, office lease terms in downtown locations are 5 years with options to renew for an additional 5-year period. Rents are quoted in Canadian Dollars (CAD) on a sq ft per annum basis as are service charges which are quoted as additional rent on sq ft per annum basis. Currently rental rates for Class A+ buildings are between CAD 34 - CAD 37 per sq ft per annum and service charges (additional rent) are CAD 23 – CAD 26 per sq ft. per annum.
With a limited office vacancy in the downtown area and a high level of tenant interest with a limited development pipeline for the short to medium term, Tenant Incentives (TI’s) or rent frees are not being offered by landlords. The market sentiment suggests that until new downtown developments enter the market, which is likely in late 2027, the limited vacancy rates will mean tenant competition to secure premises will remain strong.
