Toronto’s office market has had more occupiers move into space than move out for the first time in six years.
In its Greater Toronto Office Report for the fourth quarter, brokerage Avison Young said downtown Toronto is leading the long recovery from COVID-19. It added that net absorption, or move-ins versus move-outs, across the region turned positive for the first time since 2019. Net absorption totalled 940,400 square feet in 2025, with downtown Toronto leading the way and making up for markets on the negative side of the equation.
“The GTA’s overall availability rate fell 30 basis points to 19.2% during the fourth quarter — and was down 200 [basis points] year-over,” the report said.
The Toronto market has a total of 34.3 million square feet of available office. Of that, 5.4 million square feet is sublet space, according to Avison Young.
The rebound is led by return-to-office mandates in the banking sector that Avison Young said it anticipates will continue through the first quarter. The availability of large-block spaces also declined because banks, primarily, and other large occupiers have absorbed high-quality Class A offices.
"Tenants remain focused on finding well-located buildings with the best amenities to enhance their employees’ workplace experience," the report said.
The vacancy rate in trophy buildings stands at 3.7% compared to 17.1% for the overall officer market, Avison Young said.
CoStar analyst Ben Haythornthwaite said the flight-to-quality office space is gaining momentum.
"Toronto’s office market is showing increasing signs of stabilization, and most notably, the gap between availability and vacancy has reverted to pre-pandemic norms, indicative of rising demand," Haythornthwaite said in an interview. "However, improvement isn’t uniform across the market; rather, it’s concentrated in well-located high-quality assets where tenant interest is 'laser focused.'"
An indicator of the turning point, Haythornthwaite said is CIBC's recent sublease of the former Shopify space at The Well.
“Demand for sublease space that had original terms set close to the pre-COVID market peak suggests that occupiers are eager to secure space while it is still available," he said. "This makes sense given that we are nearing the end of the pre-COVID development cycle, limiting the amount of new space that will come to market over the medium term."
Still, the greater Toronto office market has roughly twice the available office space as pre‑pandemic levels, he said, However, "the trajectory has shifted," Haythornthwaite. "Conditions are not yet fully recovered, but the market has stopped deteriorating and is increasingly characterized by selective, quality‑driven demand.”