Industry researchers describe the shift as more than a rebound — it’s a structural turning point driven by large employers bringing workers back to the office at scale.
A Five-Year High in Office Leasing
Toronto recorded its strongest office leasing activity in five years in late 2025, with close to two million square feet absorbed in a single quarter. This resurgence is being powered by Canada’s largest financial institutions, government-related users, insurers, and global technology firms.
Return-to-office mandates are no longer tentative. Major employers are moving decisively toward full or near-full in-office attendance, reversing years of downsizing and subleasing.
The result: Toronto is now leading the national office recovery, while other markets remain uneven.
Why Toronto Is Outperforming Other Cities
Compared to Toronto’s accelerating demand:
Calgary’s office market remains constrained by mergers and consolidation in the energy sector
Vancouver’s leasing activity has remained largely flat
Toronto continues to attract long-term commitments from institutional and global tenants
Public transit data reinforces this trend. Commuter ridership across the Greater Toronto and Hamilton Area rose meaningfully year-over-year, confirming that employees are physically returning to downtown offices.
Vacancy Is Still Elevated — But the Details Matter
While overall downtown vacancy remains higher than historical norms, the composition of that vacancy has changed dramatically.
Subleased office space — often a signal of corporate downsizing — has fallen back to levels last seen before the pandemic. This indicates normalization rather than distress, as companies once again need the space they occupy.
The market is no longer flooded with excess inventory. Instead, availability is tightening in the segments tenants actually want.
The Great Divide: Trophy Offices vs. Older Buildings
Toronto’s office recovery is highly uneven across asset quality.
Top-tier and trophy office buildings are experiencing:
Extremely low vacancy
Rising rents
Strong competition among tenants
Premium pricing justified by amenities, transit access, and modern design
By contrast, older Class B and C buildings are facing:
Significantly higher vacancy
Capital improvement challenges
Growing pressure for conversion or repositioning
In fact, vacancy in Toronto’s best office assets is now in the low single digits, while older properties remain closer to one-quarter vacant. This gap is the widest the city has ever seen.
No New Supply Is Coming Anytime Soon
One of the most important forces shaping Toronto’s office market is what isn’t happening: new construction.
Very few major office projects have broken ground in recent years, and there is virtually no new trophy-quality space expected until the next decade. That scarcity is already pushing rents higher and intensifying competition for premium locations.
As demand peaks and supply remains constrained, tenants that delay decisions risk being priced out of the best buildings.
What Comes Next for Toronto Offices
Market forecasts suggest office demand may peak in the near term before stabilizing later in the decade. However, the long-term implications are clear:
High-quality office space will remain scarce
Premium rents are likely to continue rising
Employers may face employee resistance if quality space is unavailable
Infrastructure challenges and economic uncertainty remain key risks
Despite broader economic headwinds, Toronto’s office core is proving far more resilient than expected.
What This Means for Toronto Real Estate Overall
A revitalized downtown office market supports:
Higher foot traffic
Stronger retail and service demand
Improved transit usage
Long-term stability in commercial property values
For investors, lenders, and business owners alike, Toronto’s office revival signals renewed confidence in the city’s economic core.
Toronto isn’t just recovering — it’s reasserting itself as Canada’s dominant commercial centre.