Canadian downtown office vacancy has declined for the first time in four years, CBRE reports.

The average downtown vacancy rate fell 10 basis points to 18.8% in the first quarter of 2025, according to the commercial real estate services firm. That marked the first drop since the same period in 2021.

Vancouver and Winnipeg were among five cities that led the way.

“Trophy and class A product continues to be the most in-demand; trophy has average 11% [vacancy] over the last two years,” said CBRE in the report.

Sublets have decreased to their lowest level from their peak in the third quarter of 2023. However, office development remains modest with only 3.2 million square feet under construction.

Only one project was completed in the first quarter of 2025 and no construction starts occurred. Just over a third of the remaining pipeline comprises mixed-use developments that include multi-residential and retail offerings.

Montreal, Edmonton and Calgary saw about 587,000 sf removed from their office inventories for conversions to other asset types. The removals put a modest 10-bps dent in vacancy.

Marc Meehan, CBRE’s director of Canadian research, and Christina Cattana, the firm’s Canadian research manager, co-authored the report.

Pictured: Toronto office towers and other buildings.

Photo: CBRE

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