Canada\u0027s office vacancy crisis could open the door for more affordable housing. Find out more.
Vacancy rates are even high in coveted downtown offices, and occupancy levels for tenanted spaces are much lower than pre-pandemic levels. But the CBRE report said uninspiring older buildings will struggle to attract tenants that would likely gravitate to “well-amenitized modern spaces.” Hence, buildings with inflexible floor plans, slow elevators and dated heating, ventilation and air-conditioning systems might experience even higher vacancy rates than the local average.
Office real estate investment trusts in Canada appear to be showing similar stress markers. Many of their unit prices tumbled at the onset of interest rate hikes, with some dipping even further in March 2023. But the long-term outlook for office real estate is far from certain. Hybrid-work practices could further increase vacancy rates when leases renew in the next few years. Could this push vacancy rates in Toronto to 30 per cent or more, as is the case in Calgary? The answer depends upon the pace and size of the economic recovery and the increasing demographic footprint.Article content
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