Nearly one-third of downtown Toronto office buildings have become obsolete, says Dream REIT’s CEO.

“Probably 30 per cent of the space in downtown Toronto requires a tonne of money, a lot of investment and it’s questionable if you put the investment in that the building will be worth enough to justify it,” Michael Cooper told the Globe and Mail. “That’s what I mean by obsolete – when you put a lot of money in but you’re not actually going to increase the value.”

Many downtown office towers are obsolete because they have high operating costs and need an infusion of capital to make them attractive to tenants in today’s milieu, where tenants can be very selective.

When demand was much higher in 2019, tenants were happy to take what they could get in order to have a presence in the country’s financial capital, Cooper told the Globe. But today, nearly 20% of downtown office space is available for lease and prospective tenants can be choosy.