Suburbs want office space

A new report says Canada is on pace for its first year of positive office leasing activity since before the pandemic after six of 10 major markets recorded net positive demand in the third quarter.

Commercial real estate services firm CBRE says Toronto led the way in office space commitments during the quarter, with more than 650,000 square feet of positive net absorption split between downtown and suburban buildings.

That was offset by softness in Montreal, Vancouver and Ottawa, where overall office vacancy rates rose quarter-over-quarter.

The report says suburban markets have continued to show improvement, with the national suburban vacancy rate falling one-tenth of a percentage point to 17.3 per cent in the quarter, while the national downtown vacancy rate rose three-tenths of a percentage point to 19.7 per cent.

Seven Canadian cities recorded declining suburban vacancy in the third quarter, led by London, Toronto and Calgary, while four markets -- Edmonton, Calgary, Waterloo and Winnipeg -- had lower downtown vacancy.

CBRE national research managing director Marc Meehan says a gap is emerging between older office buildings, where demand is lagging, and "trophy assets," where vacancy rates fell one-fifth of a percentage point, led by demand in Calgary and Toronto.