Office vacancies across Canada rose in this year’s first quarter as private sector companies continue with remote work arrangement for employees or opt for hybrid work models.
A total of 2.7 million square feet of vacant office space re-entered the market during Q1 as companies continue to put off leasing decisions, according to a report by Morguard Corp. (MRC)
Class B and C office space is being the hardest hit by rising vacancy rates. This rating refers to buildings that are decades old. Class A buildings are newer and situated in more desirable locations.
Most of the unoccupied office space is in Toronto, Canada’s biggest real estate market.
The report states that Toronto saw the return of more than 2.4 million square feet of office space during Q1, 1.4 million of which was in the city’s downtown core.
Canada’s national aggregate office vacancy rate rose to 17.7% in this year’s first quarter, according to a separate April report by CBRE (CBRE).
The office lease market in Canada is experiencing higher levels of supply than demand right now, concluded CBRE.
The office market is undergoing a profound change as companies choose to reduce office utilization due to hybrid work arrangements and uncertainty about the direction of the economy.
Morguard’s stock has declined 15% over the last 12 months to $102.81 per share.
