Canada Office Real Estate Market- Growth, Trends, COVID-19 Impact, And Forecasts (2023-2028)

The size of Canada Office Real Estate market is USD 20 billion in the current year and is anticipated to register a CAGR of over 8% during the forecast period.

Key Highlights

• The demand for office space is obviously quite high because Canada is home to some of the world's biggest and most successful firms. Offices are another asset class that is quite well-liked by investors. The coronavirus (COVID-19) epidemic caused the Canadian office sector to suffer, but it is now on the mend. Almost 59 billion Canadian dollars are anticipated to be invested in commercial real estate in Canada in 2022, an increase over 2020 but still much below levels in 2019.
• The coronavirus (COVID-19) pandemic resulted in a rise in office vacancy rates for the second consecutive year in 2021. Many occupiers put off their expansion plans or lease renewals at the start of the epidemic due to the economic unpredictability, but since then, the situation has shifted and market fundamentals are gradually improving.
• From a generally consistent cost of CAD 20 CAD (USD 14.71) in previous years to more than 24 CAD (USD 17.65) in 2021, the net asking rent per square foot for Canadian office space has similarly climbed. The demand for premier office space is still high, and in 2021, Canada supplied roughly six million square feet of new office space.
• There are several large firms in Toronto, the largest city in Canada, including, to name a few, Capital One, IBM, and Unilever. The suburbs are where the majority of the city's office space is situated.
• Downtown offices are more in demand as evidenced by the fact that suburban office buildings have much greater vacancy rates than downtown office buildings. Vancouver has the majority of its offices downtown, unlike Toronto.
• Despite having a significantly lower population than Toronto, Vancouver is renowned for being quite crowded and having a vibrant downtown. Unsurprisingly, Vancouver's downtown office space costs roughly CAD 50 (USD 36.78) per square foot, which is significantly more than the country's average.

Canada Office Real Estate Market Trends

Office spaces in Toronto and Vancouver are increasing

Office occupancy rates in downtown Toronto and Vancouver are rising swiftly. The third quarter of 2022 saw Canadian office markets continue to grow, with CBRE's new Q3 Figures report providing signs of growth in downtown areas despite resurgent demand for premium office space.

According to industry experts, Canadian office markets have proven extraordinarily resilient despite years of pandemic-related obstacles, new supply additions, persistent remote work issues, as well as a pending economic recession.

These most recent statistics provide solid proof that cities' vitality and momentum are returning, supporting increased leasing activity. Despite the fact that the economy is the center of attention, it is proving to be harder to anticipate than normal.

Indian IT service business Mphasis chose Calgary's First Tower as the location for its brand-new 26,160 square-foot Canadian headquarters. Microsoft secured a deal for about 400,000 square feet at the B6 building in Vancouver (1090 W Pender Street).

In the meantime, Toronto saw medical technology vendor PointClickCare increase its presence by acquiring 90,000 square feet over three floors at The Well, one of the most well-known new complexes in the city.

In Q3, downtown vacancy decreased in seven of of Canada's ten major office cities, while suburban vacancy decreased in five of those markets. In the midst of a flurry of leasing transactions, Calgary, Waterloo Region, and Vancouver all saw their downtown and suburban office vacancy rates decline, making them the actual MVPs of the quarter.

Positive Pre-Leasing Indicates Hope for the Future of Office Space

As they prepare for the return of employees to offices at full vigor following a substantial decline in Covid-19 cases across the nation, corporations are reviving growth plans and reserving vast office spaces around the nation.

Several big technologies, consulting, and financial services companies, including Google, Deloitte, Amazon, Qualcomm, and Wells Fargo, have already committed to leasing huge amounts of office space in the first quarter of the current calendar year.

The third quarter saw a steady increase in pre-leasing activity overall, signaling strong demand for contemporary office spaces. The 12.7 million square foot national development pipeline is 54.0% pre-leased.

In Vancouver, 83.8% of the space that is currently being built in the business district has been pre-leased. A sizeable chunk of the 1.9 million square feet of newly constructed space in Toronto has already been pre-leased, while big deliveries like Armour Group's Westway IV in Halifax have reached pre-leasing rates of 90.3%.

Canada Office Real Estate Market Competitor Analysis

The office real estate market is relatively fragmented with developers and property consultancy firms. The market is anticipated to regain normalcy by 2022. Companies are gearing up to meet future needs, and many companies are entering the market for further opportunities. Some office real estate companies are Brookfield Asset Management Inc, Hines, Pinnacle International, Amacon, etc.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support