London's core has more vacant office space than any other Canadian city: CBRE

A record 31.4 per cent of London's downtown office space, nearly 1.3 million sq. ft., is currently sitting vacant, the highest rate of any Canadian city, according to new numbers released by the commercial real estate company CBRE.

It's a jump from the 27.3 per cent office vacancy rate recorded in the downtown in the same quarter of 2023, according to a report from CBRE.

At the same time downtown vacancies rose in the downtown, they fell in the city's suburbs. The tight office market recorded a vacancy rate of 9.3 per cent for the quarter, down from 10 per cent a year ago.

Officials with CBRE note London was a leader among cities in declining suburban office vacancies, recording a 130 basis point drop in the quarter. At the same time, London had Canada's second-highest increase in downtown vacancies in the quarter, rising 110 basis points.

Nationally, office vacancies in Canadian downtowns rose to 19.7 per cent in the third quarter, CBRE says. Six of 10 Canadian markets posting a positive demand for office space.

In a statement, Marc Meehan, CBRE's national research managing director, said owners of older office buildings have had a hard time finding tenants, but says an increase in demand for quality space "is a rising tide that could have broader benefits."

"With availability in Trophy assets beginning to tighten, demand could flow to the next quality tier of buildings, especially those well-located and with in-demand amenities."

Earlier in the year, CBRE reported that roughly 678,000 sq. ft. of office space had been removed from the London market this year through initiated and planned office-to-residential conversions and building demolitions.

London has just over 4.5 million sq. ft. of rentable office space in the downtown, with 1.57 million in the city's suburbs.

This story will be updated.