The Decibel - The office is back (at least in Canada’s financial hub)

Episode Date: September 15, 2026

Headlines about vacant office buildings and deserted downtowns is old news. The return to office, in downtown Toronto especially, is back on. Vacancy rates have plummeted, commute-fuelled traffic is up and businesses are scrambling to find more space for their workers.Globe reporter Jason Kirby takes us behind the numbers, the return-to-office mandates and what this post-pandemic shift tells us about the future of work.Questions? Comments? Ideas? Email us at [e-mail]  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It wasn't long ago that people were declaring the end of the office, or at least the end of the office as we knew it before the pandemic. Hybrid work seemed like the way of the future, and office buildings emptied out. But things have changed, at least in downtown Toronto. Now, office towers that once stood empty are rapidly filling up with tenants. Restaurants are buzzing, the once empty street. are bustling with people hurrying to their corporate jobs.

This reversal has been abrupt, and it tells us something about the direction of work culture. Jason Kirby is a reporter for the Globe's report on business. He and our colleagues, Rachel Youngly and Van Mala Supermanium, have been looking at how office footprints have changed in the heart of Canada's financial sector. He'll tell us what they've learned, how businesses and the people coming back downtown feel

about it and what this looks like in other cities. I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Hi, Jason, welcome back to the show. Thanks for having me on. So, Jason, we're talking about the office being back in Toronto's downtown core. Before we get into what's going on there, broadly, why do we care about office vacancies? Like, what is the story it's telling us about the economy? What it really tells us is it's a measure of economic activity.

Yes, people working remotely can still do their jobs, but when they're not kind of in that downtown area, they're not coming in for lunches, they're not having meetings with other people, the commute and all those things. It just leaves this kind of like economic hole in cities that we've seen. And so it's kind of a measure of that. And Toronto in particular, when it comes to, I know people across the country love to gripe about Toronto. But at the end of the day, it's also a city that accounts for like 20% of Canada's GDP. That's larger than, you know, most provinces. In fact, I think all provinces. And so, you know, the fact that at least in the downtown core, we're seeing this revival of activity and offices filling up again and people kind of coming back is kind of a sign of that economic vibrance coming back.

And we're seeing it in different ways that, you know, unemployment in Toronto is falling quite a lot. just over the last year. And it probably is partially related to this renewed activity. Okay. So there's ripple effects of people coming back downtown. Yeah, it does have that ripple effect into other sectors. You know, because like I said, they come downtown. They spend their money.

They do all these other things. While they're downtown, they might go to events. They might go to shows. And during the pandemic, all of those other services and businesses really suffered because there was just like this giant hole of missing people. You mentioned this economic hole. Do we have a sense of what that looked like? Like, what are the numbers there?

Well, it's hard to say what the specific numbers are because you're trying to measure something that didn't happen. But you can certainly see it in ridership levels on the TTC completely collapsed. You know, there was a lot of businesses that closed throughout the city, not just in the downtown area, but elsewhere as people weren't going out. And, you know, and you did see unemployment rise as a result. result of all of this. And so it, it, there's no question that it had this pretty serious economic fallout. And I think we all remember the pandemic and the emptying out of offices everywhere, right?

Like, in these downtowns where it was just kind of like a ghost town. Oh, yes. I go for runs and there'd be nobody there. What driving was like. It was glorious. It was like kind of like being back in the 1950s, I kind of think, it was what it would be like. The street was your own. Yeah, you're on your own. You're driving down the 401, you in like five cars. And, you know, you got it to yourself and you could make it a the city in minutes. And everybody kind of was just staying at home in their local neighborhoods. Yeah. Yeah. So what did that mean for vacancy rates in the downtown core? You know, going back to pre-pandemic, you had a situation, an availability rate in Toronto of around 6% for the downtown area. And then by 2024, that had jumped to like 18 to 20%. For all of Toronto, I think it was around 20%. So you had a really substantial increase.

Basically, you had companies saying, well, if we're not going to have people in the office, we don't need all this office space. So they started reducing the number of floors that they might have. They'd still have the lease, but they'd put that up for a sub lease. And so, you know, when we did our study, we initially in 2024 kind of looked at this sample of the 47 largest buildings. And if I remember correctly, something like a third of the buildings had at least, you know, one fifth of their space empty. and several of the buildings were 50% empty. Oh, wow. So you just, like, imagine what that's like.

You know, you'd be getting to the elevator and there's nobody around you because, you know, you're going to pass all these empty floors. And so it really, that translated again into just this empty feeling in the city. And so as companies didn't need that space, they got rid of it resulting in millions and millions of square feet of office space,

just sitting empty and on the market. And this move away from the office is really exemplified by a decision by Shopify in 2022. Can you tell us what happened there? Yeah, well, you know, back in 2018, Shopify, and, you know, it's this e-commerce company that helps small businesses, you know,

run the online portion of their stores. Been a very fast-growing company, and they had signed a 15-year lease in 2018 to be the anchor tenant in the well, this big commercial development west of the downtown core. But then in late 2022, they basically said, well, we're going to shift, to a remote hybrid work policy from now on are people don't need to come into the office.

And they put something like 348,000 square feet, you know, is equivalent of like seven floors of space onto the sublet market. And basically that's at empty for a long time. Shopify was still paying for it. They'd sign that lease. They still had to pay for it. But they weren't occupying it. You know, that would have been their name on the side of that building and everything and

just walk away from that, really exemplified the attitude businesses had at that time and exemplified the market and how rough it was for the landlords who own these buildings. On the landlord point, they must have been losing a lot of money. So what were they doing? Well, one thing they didn't want to do is actually lower their rents. You know, the last thing you want to do is actually lower your rent because then that affects the value of the building. So what they would do is offer all sorts of incentives and inducements to get tenants to move into their spaces. And so that might be offering several months of no rent. You don't lower the actual rent, but you're saying, we'll forgive you for this, you know, however many months of rent. Or they

would say, if you come in, we'll renovate the whole kitchen and bring it up speed. It will pay for everything. So they would, they were doing all of these kind of things because it was a tenant's market. And the tenants were the ones who controlled balance of power. Yeah. Okay. So this emptying out of downtown meant, you know, less foot traffic, businesses in the area, like retailers and restaurants closing down. And also this existential threat or fear that the downtown may never return, right? That was then. This is now.

We're in 2026 here. And it sounds like things are changing. So what do vacancy rates look like now? Yeah. Well, the availability rate in the south core of downtown Toronto, which is the area closest to the water, that was something that had gone, like I said earlier, from around 4 to 6 percent availability before the pandemic all the way up to almost 20% you know in 2024, 2025. Now it's back down to like 6%.

Oh, wow. That area is completely fully recovered. Other areas, you know, the broader Toronto metro area, you know, the financial core, which is a little bit further north from the waterfront, it's come down a lot as well. It was also up in that 18 to 20% availability. But now it's come back down to about 12%. These numbers were as of last month. We're not fully back across all of those areas as low as, you know, those premium buildings that are right on the waterfront.

But we are seeing recovery in all these different sectors. And so who are we talking about here? Like what businesses are back in person in a substantive way? Well, I mean, the biggest driver of all of this is banks. And, you know, it's one of the reasons why Toronto might be seeing this in other cities haven't. Because we just have so many financial institutions concentrated in the downtown area. So the banks, they've been pushing for people to get back into the office. They set kind of like a two to three days a week.

We'd like you back. And then last May, RBC said, we're going to go back to four days a week. There's some, you know, it would have to be there all the time. And then soon after that, other banks followed suit and then other companies did. And so you've really seen the banks taking a lot of this space that's on the market. And what they're doing is they're bringing people from other parts of the market. the city, you know, in some cases from their their buildings that are scattered around in other areas and they're bringing everybody and consolidating them downtown. So you're having that effect.

RBC, CIBC, National Bank, all of them, Scotia Bank has been a big one. And then there's been some tech companies as well, like Wealth Simple has moved into part of the well. And in the case of Wealth Simple, you know, it's interesting because they are a rival to the banks and to growing company and they need that scale of space. Some of the other tech companies I talk to Lyft, the ride share company, the rival to Uber, they're going to be soon moving into 90,000 square feet at first Canadian place for its newest tech hub. So we know that banks drove the return to the office, but do we have a sense of how we got

here? Who was behind this push to get people back to the office? Well, I mean, you had, you know, Mayor John Torrey at one point was kind of pushing for you. You had a lot of local businesses, the local business organizations in Toronto also pushing for it. They represented a lot of the small companies and the small businesses that were suffering without people around. The banks, you know, 2022, 2023, they started talking about it in a bigger way. This notion being, you know, as they put it, that our productivity is being hurt. Our earnings are being hurt by everybody, you know, not being in a environment where they can share ideas quickly and cooperate and coordinate things.

Dave McKay at RBC said something about like technology, you can't replace that human experience that you get by being in the office side by side and that spontaneity that comes from that. And so, you know, they were all kind of pushing for it. Olivia Chow then, you know, in 2024, started meeting with some of the bank CEOs as well and she was pushing for it. And then that's when you did see the banks kind of come in with these much stricter return to office mandates.

Once they'd done it, you've now started seeing it. roll out to a lot of smaller companies too. We'll be right back. Okay, so people are going back to the office. So what does that actually look like now? Like how has the office changed since the pandemic? Well, I mean, one of the biggest things that's changed is for a lot of companies, they probably don't have enough space to accommodate all of their workers if they did come in.

I mean, I'm sure there are some out there that do have five day a week. requirements. But, you know, we've, we've had to adapt to booking our desks, you know, so many people can relate to this. You know, you've got your little app and you're going to be in, okay, well, I got to make sure that I secure my desk. It used to be that you had your cubicle and, you know, maybe you had your kids pictures up on, on there. And it just felt like a little bit is your personal space away from home. Now everybody's sharing cubicles and, uh, hoteling and jockeying for space. We're still in this growing pace. phase, I think, of the return where for a lot of companies, they don't have enough space to

accommodate everybody. They do want everybody back in. So they're sending these mixed messages to their employees saying, we want you in, we want you in, but don't come in all at once. And also you have people coming in and then also sitting at a desk on a video call. So it's like, I'm here for the video calls. Totally. Totally. I mean, that was one of the complaints that we heard from bank employees in particular of like, okay, I'm commuting in. I commute in for an hour and a half. And then throughout the day, I'm on five or six. I go into a meeting room and then I've got to sit there on a video call with other people. Why am I here to do a video call when I could just be at home doing that video call and not losing an hour and a half of

commute time? Because, I mean, that's one of the other things that's changed. And it might have happened anyways, but the commutes have noticeably gotten worse for a lot of cities. And Toronto has definitely been the case because transit was ridership was way down. There was kind of like a cut back in service and that's been slow to catch up. The roads are more congested. You've got, you know, a lot of cities embarking on all sorts of infrastructure projects that's adding even more challenge for the commuter. Road repairs was always a thing, but I know from looking at, you know, some of the capital expenditure data around road repairs, that we are definitely seeing a lot more than we did used to before.

Interesting. Okay. Yeah, it's not just your imagination. This is actually happening. Okay. There is more construction. There is more construction. Okay.

So when you're talking about just like this culture, like people coming in or being on video calls or, you know, not enough space having to hotel, what are you hearing about how workers feel about being made to go back to the office full time or close to full time? Yeah. I mean, it really is a wide array of views on. that. You know, we talked to several bank employees who all were kind of complaining that they're being forced to come back, but they didn't feel that the companies had really gotten things ready for them to come back properly. You know, they were jockeying for space still all

the time. A lot of people moved out of the city during the pandemic because, hey, everybody, your work is now going to be done remotely and everybody can shift to a hybrid work environment. okay, well, I'm going to go find a place that I can afford that's outside the city and I'll drive in when I need to for like the once or twice a week. And now it's, okay, no, actually we've changed our mind. We want everybody to come back in full time. And so that's definitely been one of the frustrations. I mean, one of the things that's happened, though, is, you know, I talked earlier about the kind of the shift in the balance of power between landlords and tenants and how that's turned. Well, there's also a shift in the balance of power between employers and employees.

Yeah, tell me about that because, you know, in the early days of the pandemic, there was a sense that workers were saying that hybrid work is working for them. Yeah. They're more productive. And now we're seeing this shift. The companies were willing. They were much more, okay, you know, if that keeps you happy and doesn't make you want to leave, then, you know, we'll do this. And, I mean, that was partly being driven by the fact that we had record high job vacancies. So there's more power for employees that at the point.

In that kind of an environment where you got record low unemployment and huge numbers of job vacancies and, you know, the opportunity to jump around. And that's an environment where if you want to say, I'm going to work remotely, your boss is maybe more inclined to agree and to concede. But what we saw subsequent to that is a few things. For one thing, the job vacancy numbers have come way down. Unemployment has gotten, you know, risen. And you've got a trade war that's been going and dragging on since the start of 2025 corresponding to all of this period of people going back to the office. You know, people are uncertain about their jobs. Then you add on the AI uncertainty.

You know, all of these forces have, I think, had a psychological effect on workers that's made them feel like they're not able to necessarily push back against those return to work mandates. when they came down and as they continue to come down. Interesting. Okay, so it's kind of like the shift in power has gone back to companies and companies, at least some of them are wanting people back in the office more full time. Yeah. Right. So we've been talking about how things have changed in downtown Toronto.

What are we seeing in other urban centers? Yeah, well, you know, if you look at a city like Calgary, it's an interesting one, their vacancy rates have actually come back down as well to the pre-pandemic level. The problem there is their pre-pandemic commercial office market was in a really bad state. Yeah, it was already in a state that was problematic. Yeah, there was a lot of vacant available space, kind of fallout from when oil prices crashed and the economy slowed down there. They kind of started the pandemic from a higher level and they're back down, like I said, to where they were before the pandemic, but considerably higher vacancy rates still than they were. you know, if you went back further a few years.

Montreal and Vancouver, we looked at large buildings there. And what you see is vacancy rates have stopped arising, but they've kind of plateaued. You haven't seen a really big decline there. And it might be that they don't have banks kind of mandating this and saying that their workers have to come back on mass. But going back to Calgary, the interesting thing there is what they did was one of the things that's helped is they've been much further ahead than other cities. at taking vacant office space and turning it into apartments and residential. You know, Toronto talked about this a lot during the pandemic and the lockdowns. And what are we going to do with all this empty office space?

Well, let's convert it. And we talked about it and talked about it and talked about it and really didn't do very much on that front. Easier said than done as well, right? It's very difficult. At that time, you had a resistance to that idea from businesses saying, well, don't be too rash because things might come back and then you're going to be in a situation where you need office space. And lo and behold, here we are. you know, that actually kind of did transpire.

But it certainly helped in Calgary to have that programs like that that have reduced all the vacant space. Right. So what you're kind of painting here is that this won't necessarily be the same thing when it comes to the return to the office in other places. So far, at least in terms of what it's meant for commercial vacancy rates and that. And that goes for areas around Toronto or even greater Toronto area. things have come down, but they're still higher than they were before the pandemic in terms of, like, office vacancy rates.

But, you know, I think we are starting to see more companies further afield start to push for return to office mandates, whether they're, you know, maybe the banks kind of like led the charge on that. But certainly other companies have started to fall kind of in line with that thinking. Okay. So, Jason, I am a person that does come into the office, probably about 90 percent of the job. time. Our recording studio is here. And I actually do enjoy the routine, but I get how this could be a headache for people. Like we're talking about longer commutes, there's more traffic. It's not easy to do that, right? I'm just wondering, who gains from this return to the office the most? Oh, that's a great question. Well, for one thing, landlords of office buildings, big office

buildings, they probably are the happiest lot of everybody because they can measure this effect in the higher rents that they're able to charge because they're no longer having to, you know, do all, bend over backwards to lure people in. They can say, oh, sure, you know, you can have that space, but it's going to cost you this much more. So they're probably the happiest.

I would say the CEOs of the banks are probably happy to have people back in. There is something to be said for going through an office and actually feeling the buzz of people around going in and out of meetings and having that water cooler discussion. and stuff like that. But the happiest people are definitely the landlords.

Then you have the CEOs. I think they'd be pretty happy. Managers are probably happy to have their people back in the office. They can keep a better eye on them. And so then you have this kind of like the drones, us drones trying to, you know. And we're all over the place. If you talk to some young workers, they actually like going in, you know, a lot of them. Because they're just starting out their careers.

You want to be visible. You want to be seen. There's a value to your career in being. seen by the boss and just having mentors around you and being able to learn from them. The other end is though those more senior employees, you know, who have got families with kids. And it was pretty fantastic to be able to have that flexibility of saying which days you were going to go into the office. And I haven't seen any really good studies yet of how happy people are because I don't think

you can nail it down to one particular attitude. I like it. I come in three to four now, days a week myself. And I like having those impromptu conversations that just happen because you see somebody and you start talking about a project that you're working on. And lo and behold, an idea comes out of it and you run with it. And that is really much harder to do when you're remote and you've got to turn on your Zoom connection and have that meeting through a screen.

Yeah, absolutely. So, I mean, we are going back to the office, it sounds like. So there are pros and cons. But in the end, there are good things there. I think there are some good things. There's definitely some people who are never going to be happy with it. But, you know, as is always the case. Yeah.

Jason, thank you so much for coming on the show. Thank you very much. Thank you very much. That was Jason Kirby, a reporter for the Globe's report on business. That's it for today. I'm Cheryl Sutherland. This episode was mixed by Rachel Levy McLaugh. Our producers are Madeline White, Rachel Levin McLaughlin and Michal Stein.

Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.