TORONTO – The demand for office space in Canada is giving landlords the upper hand in lease talks, as a recent report reveals that net leasing activity has stayed positive for five straight quarters.
According to CBRE, the total net absorption of office space across Canada reached two million square feet in the third quarter of this year, with nine out of eleven regional markets showing positive net leasing activity.
Marc Meehan, managing director of research at CBRE Canada, stated that the trend of office recovery seen over recent years is now “well-entrenched.”
He noted that it’s currently a landlord’s market due to a limited supply of “trophy” buildings, which is causing competition for other types of properties.
“We’re seeing further trickle over effect as leasing velocity is increasing in the areas neighbouring downtown cores, especially in Toronto,” Meehan said in a news release.
Eight Canadian markets experienced declining downtown vacancy rates during this quarter, led by Toronto, Calgary, Ottawa and Halifax. The report indicated that Vancouver was an exception among major Canadian cities, showing weaker performance with increased vacancy mainly due to consolidation by one tech tenant.
This change comes alongside an expected slowdown in new supply entering the market.
The report highlighted no significant office project completions during the three-month span and projected full-year new supply to hit just 2.3 million square feet-well below the average from the past five years.
New inventory is anticipated to stay “constrained” as significant deliveries are not forecasted beyond 2027. CBRE also mentioned that conversions and demolitions are affecting office supply, with seven such cases occurring last quarter across Toronto, London and Ottawa.
“Elevated new supply deliveries weighed down the office market for many years, but office demand has come back so strongly that we’re now looking at a challenging future for businesses as many won’t be able to access quality office space in sought-after locations,” Meehan said.
“The earliest that Canada will see any significant new office completions is 2032, but that timeline shifts with each day that new construction isn’t kicked off.”
Meanwhile, national sublease space decreased by 1.3 million square feet this quarter-the largest quarterly drop since 2005.
CBRE noted that sublet space has reduced by about 50 percent from its peak more than three years ago, indicating improved sentiment among occupiers.
©2026 The Canadian Press
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