Businesses pulling back on sublet space as return to office looms: report

A new report suggests Toronto businesses are making plans to call employees back to the office.

Commercial real estate firm Avison Young says companies that were trying to shed downtown office space on the sublet market are reversing course.

It says available sublet space fell for the first time in six quarters, ending the quarter at 3.2 million square feet or 32% of available space downtown. Avison Young says this is a sign that some Toronto businesses are anticipating more employees will return to the office soon.

Some companies including TMX Group and Intelex Technologies have withdrawn sublet space from the market in part or altogether.

Toronto’s downtown office towers remain mostly empty in the face of continued Covid-19 restrictions. The Avison Young report says the downtown office vacancy rate hit a new all-time high of 7.3% in the second quarter.

But some companies have already offered a glimpse into what return-to-work strategies could look like. Sun Life is allowing staff flexibility to decide their own work arrangements, while Apple has asked its employees to return to the office three days a week starting in the fall.

The frequency of remote versus on-site work will vary by industry, function, and location, as well as personal circumstances and preferences, Avison Young said.

“Downtown will be the catalyst for the GTA’s growth when the market recovers,” Avison Young said in the report. “The possibilities of a hybrid workplace have helped shift occupiers’ mindset from `will we ever return to the office?’ to `when and how?”’

The Canadian Press

The Canadian Press is a national news agency headquartered in Toronto and founded in 1917.