The Toronto office market is poised for significant growth in 2025, creating a unique opportunity for real estate investors. While vacancy rates are expected to remain high early in the year, industry experts predict a shift towards large lease deals and a flight to premium office spaces.
One of the most notable trends is the early lease renewals and expansions, as institutional employers regain confidence in the post-pandemic office landscape. For example, EY Canada recently renewed its lease at the EY Tower and expanded by 50,000 square feet. This deal, the largest of 2024 in Toronto, signals the beginning of a broader trend expected to gain momentum in 2025.
Experts predict that the office market will stabilize as the supply of premium spaces is gradually absorbed. The key to success for real estate investors lies in understanding the growing demand for high-quality office spaces in prime locations that are expected to outperform other properties. Companies are increasing their focus on modern amenities, sustainability, and flexible workspaces to provide a top-tier employee experience.
The EY Tower in downtown Toronto exemplifies this shift. Redeveloped into a 40-storey building with high-performance energy systems and luxurious amenities, it has remained at full occupancy. Its success highlights how well located, well-designed, and amenity-rich buildings are attracting long-term tenants. With demand for quality office space set to increase, investors with properties in desirable locations are likely to benefit.
While vacancy rates in downtown Toronto are still relatively high, the market is starting to stabilize. By the second half of 2025, leasing activity is expected to rise, driven by companies committing to longer-term leases after years of opting for flexibility. For investors, this means that the Toronto office market is heading toward healthier conditions, with more secure and predictable rental income streams.
In conclusion, 2025 presents a promising horizon for those investing in office space in the GTA. The ongoing flight to quality, combined with a stronger economic outlook and improved leasing conditions, positions investors for success. Now is the time to assess your portfolio and explore opportunities in Toronto’s premium office spaces.