TORONTO — Strong demand in Canada’s office market is shifting the advantage in lease negotiations toward landlords, as a new report says net leasing activity remained positive for a fifth consecutive quarter.
CBRE said the net absorption of office space across the country totalled two million square feet in the third quarter of this year, with nine of 11 regional markets recording positive net leasing activity.
CBRE Canada research managing director Marc Meehan said the office recovery trend of recent years is now “well-entrenched.” He said it’s now a landlord’s market amid limited “trophy” building space, which is spilling over into competition for other inventory in other property classes.
“We’re seeing further trickle over effect as leasing velocity is increasing in the areas neighbouring downtown cores, especially in Toronto,” Meehan said in a news release.
Eight Canadian markets reported declining downtown vacancy in the quarter, led by Toronto, Calgary, Ottawa and Halifax. The report said Vancouver was an outlier among Canada’s major cities, with a weaker performance that saw an increase in vacancy largely due to consolidation by a single tech tenant.
The shift comes as an anticipated slowdown in new supply appears to be underway.
The report said there were no notable office project completions during the three-month period, as full-year new supply is expected to reach just 2.3 million square feet, well below the recent five-year average.
New inventory is expected to remain “constrained” amid a lack of significant deliveries forecasted beyond 2027. CBRE added that conversions and demolitions are also chipping away at office supply, with seven such cases taking place last quarter across Toronto, London and Ottawa.
“Elevated new supply deliveries weighed down the office market for many years, but office demand has come back so strongly that we’re now looking at a challenging future for businesses as many won’t be able to access quality office space in sought-after locations,” Meehan said.
“The earliest that Canada will see any significant new office completions is 2032, but that timeline shifts with each day that new construction isn’t kicked off.”
Meanwhile, national sublease space fell by 1.3 million square feet in the quarter, marking the largest quarterly decline since 2005.
CBRE said sublet space has fallen around 50 per cent from its peak more than three years ago, which signals improved occupier sentiment.
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Sammy Hudes, The Canadian Press
This report by The Canadian Press was first published Oct. 1, 2026.
