After Years Of Remote Work, Toronto's Office Market Is Heating Up

"In early January, the Ford government's return-to-office (RTO) mandate took effect, ordering 60,000 public servants back to the office. The move culminates more than a year of RTO mandates from big names in tech and finance, reaching a fever pitch in late 2025, and has put a significant amount of pressure on Toronto's office market. The trend is reversing years of near-stagnant activity in the downtown commercial real estate scene, which took a big hit from COVID-era work-from-home policies."

"And it comes as companies are advocating for increased productivity and workplace camaraderie, alongside needing to justify massive investments in costly office spaces. But the road back to the office hasn't been seamless. After shedding space during the pandemic, workers at some of the Big Five Banks complained about lack of desks and office space upon returning for four-day in-office weeks in the latter half of 2025. More recently, Premier Ford has acknowledged delays in providing adequate office space for public servants, calling the roadblock "a little bump.""

""Demands have increased significantly, and we have no substantial new developments planned that could deliver in the next four years," he says. At the same time, businesses have grown while also cutting down on office space during the remote-work years. Much of the increased demand from RTO has been concentrated in trophy and upgraded A-class office spaces, says Best. These are newer offices that are rich in amenities and well-located, particularly in the financial core and within close proximity to Union Station. But the desirability and scarcity of these trophy office spaces has created a bifurcated market."

Return-to-office mandates, including the Ford government's directive for 60,000 public servants, have sharply increased demand for downtown Toronto office space. Companies seek greater productivity and workplace camaraderie while needing to justify costly office investments. The return has exposed capacity shortfalls after pandemic-era space reductions, with some bank employees finding insufficient desks during phased returns and the provincial government acknowledging delays. Supply constraints reflect no major new developments deliverable in the next four years while businesses simultaneously reduced footprints. Demand has concentrated in trophy and upgraded A-class buildings, producing low vacancies there and much higher vacancies in B- and C-class stock, creating a bifurcated market.

Read at Storeys