Slight Improvement Seen in Downtown Office Market Despite Tariff Threats

March 31, 2025 TruthUSA

A recent report indicates that Canada’s downtown office vacancy rate improved slightly for the first time since the beginning of the pandemic.

According to the CBRE Group Inc. report, the national downtown office vacancy rate dropped to 19.9 percent in the first quarter after reaching a record high of 20 percent in the previous quarter.

The report mentions that both Toronto and Vancouver experienced decreases in vacancy rates despite the lingering effects of tariffs, but it notes that the overall market is still uncertain and the impact of trade tensions will become clearer in the next quarter.

In recent years, the influx of new supply has been contributing to higher vacancy rates, but the first quarter saw a rare occurrence where no new supply was added downtown, while approximately 400,000 square feet were removed from the market for conversion or demolition.

The combined downtown and suburban office vacancy rate, which has been fluctuating within a narrow range in recent quarters, remained unchanged from the previous quarter at 18.7 percent.

CBRE predicts that the industrial real estate market may be more affected by tariffs, but the first quarter still showed relatively strong net absorption.