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Vacancy rises amid record deliveries, speculative construction remains elevated
Toronto's vacancy rate rose by 20 basis points (bps) in Q3, reaching 2.5%, marking its highest level in five years. Despite this increase, the vacancy rate remains significantly lower than most major markets in North America. Toronto's vacancy is primarily driven by a surge in year-to-date deliveries, which exceeded 13.9 million square feet (msf), compared to a five-year average of just 2.7 msf. Of the 4.6 msf delivered this quarter, over 30% or 1.4 msf was delivered vacant. The current construction pipeline is over 11.1 msf, nearly 80% of which consists of speculative projects that could further impact vacancy if they fail to pre-lease.