Downtown Toronto office vacancy spiked in the second quarter, says a Newmark report.

Vacancy hit a 24-year high of 14.6% year-over-year with a sizable sudden increase in negative absorption concentrated in the Downtown North and Financial Core. The rapid increase may have been related to the area’s ongoing traffic congestion. A large amount of infrastructure construction has been cited as a primary cause of daily traffic bottlenecks.

Despite the large overall downtown vacancy increase, class A and B sublease vacancy has been tightening since 2023, and portions of Downtown South and the Financial Core appear to be benefitting from proximity to Union Station as tenants seek to “anchor” close to the central public-transit hub.

Square footage-wise, the second quarter represented the weakest period of downtown office leasing in a decade as tenants only leased 200,000 square feet.

Most leasing activity occurred in the Financial Core.

The report was authored by Andrew Petrozzi, Newmark’s head of Canadian research.

Photo: Courtesy of Newmark