Office absorption concentrated in newest towers

Like many trends, the pandemic accelerated the 'flight-to-quality,' which remains a key focus as employers explore new ways to attract employees back to the office.
Avison Young data shows that since Q1 2020, nearly all positive net absorption across Canada has occurred in buildings constructed in the 2020s, while older buildings from the 1980s or earlier have seen declines.
As the current construction cycle nears its end, 5.3 million square feet remain under development mainly in Toronto and Vancouver, with the last project expected to be completed in 2026. The limited new supply is currently at relatively high pre-leasing levels (above 55%), making it more difficult to find availability in these newer spaces. This is likely to shift demand toward older properties, starting with spaces where landlords are already making significant capital improvements to compete with the market's highest-quality buildings.

November 6, 2024