Vacancy rates are finally dropping for the most desirable office space in Canada’s largest market as employees continue to head back to in-person work , partly against their desire.
Increasingly, landlords and employers in Toronto have noticed employees’ reluctance to return and are working to make offices more appealing.
It’s a tough sell, especially when what was once almost a given — your own dedicated desk — in short supply.
Instead, crowded office spaces are increasingly organized around the “hotelling” principle, where you sign in to a desk for the day.
Cal Jungwirth, director of permanent placement services at the talent recruitment firm Robert Half Inc., said “very few people” like hotelling.
“An office that is comfortable, functional and well equipped with different amenities is going to be more attractive. Any advantage helps you retain people and attract people,” he said.
Statistics Canada said in May 2026, 11.4 per cent of Canadians worked exclusively from home , down one percentage point from May 2025 and from 18.7 per cent in May 2022. About 9.8 per cent of workers had a hybrid work arrangement in May 2026, and StatCan said that percentage has not varied much since 2023.
Robert Half’s most recent data found that fully on-site job postings still make up the majority. In-office-only positions increased from 63 per cent in the fourth quarter of 2025 to 84 per cent in the second quarter of 2026.
Jungwirth said the major advantage of a positive work environment is that people stay in a job longer. “Will it keep you in a lousy job? No,” he said.
On hybrid, he said flexibility will remain a differentiator as it becomes rarer. “But if you only consider hybrid in a job search, it will eliminate a lot of opportunities, and that’s their choice,” he said.
David Cairns, vice-president of San Francisco-based firm Kadence, which optimizes the workplace for hybrid setups, said the market is becoming fragmented and “superstar companies” working in fields like artificial intelligence have no problem offering assigned seating.
“The things that make that easier for them are that some of these companies are cultish, and the people want to be there as a team,” said Cairns, adding it made sense to provide assigned seating to them.
But, he added, part of the market is still driven by leadership’s desire for everybody to be in and have an assigned-seat culture, driven more by the hope that people will come in five days a week. But the reality is that the seating isn’t being used, leaving managers to come up with alternative plans.
“It just doesn’t make any sense to have (assigned seats),” said Cairns, who was once a senior leasing vice-president with brokerage CBRE in Canada.
The far larger part of the market is companies that have been consolidating for a decade, with the pandemic only making the shift more pronounced.
“They have already been in the unassigned seating land, and that can look like (one of the banks) in Canada,” said Cairns. “Pick your Fortune 500 company that has been around for a while, and they are already moving in that direction.”
The evolution of technology is allowing employers to get an even better grip on how much time employees spend in their office.
“You can look at it from a policing standpoint or see that it is relevant for planning things like food services,” said Cairns.
Scott Figler, senior director of research and strategy at JLL, said utilization has become a key factor. For some companies, if you are not in the office at least three days a week, you are not getting a permanent desk.
Ross Moore, a Vancouver-based senior vice president and managing director with tenant representation, said he still sees many smaller to medium-sized tenants opting for leasing that incorporates an assigned seating culture. “Some of this depends on the industry,” he said,
On the leasing side, Figler, senior director of research and strategy at JLL, said the market is tightening across Toronto, with vacancy rates below five per cent in the so-called AAA “trophy buildings.”
“We had a few years where leasing demand was subdued, and it’s come back, and you just can’t get into the top buildings in the core,” said Figler, about the spillover effect happening.
At the same time, he said rents haven’t risen enough for anyone to build a new tower, with the gap close to 25 per cent of what is needed. That gap is creating incentives to modernize buildings with great locations.
“I think what you’re gonna see over the next year or two years is a lot of acquisitions where a certain asset has potential to compete with the high end of the market,” said Fielder.
At GWL Realty Advisors, a wholly owned subsidiary of The Canada Life Assurance Company, which has more than $18 billion in assets under management and more than a quarter in the office sector, the firm sees opportunity.
“I don’t think there was any landlord thinking about how do we attract people to come to our office space,” said Devan Sloan, vice-president of asset management, about pre-COVID days when GWL’s massive portfolio had a sub-two-per-cent vacancy.
But the focus is now very much on creating what he calls “a centre of gravity” at the office where people want to come in.
Sloan said that can mean major design changes to the lobby or adding amenities, such as Michelin-starred restaurants, that put them ahead of the pack. “When we renovate, instead of hiring your traditional office design firm, we hired a designer that did the Four Seasons,” he said.
Employers, for their part, are now considering the space their employees will want, said Sloan. “It’s no longer about locating close to where the CEO lives,” he said. “You won’t see a tour where a tenant is looking for space without somebody from HR on the tour that’s representing what the average employee wants. They want to know all the little tidbits they can sell through.”
Still, some people won’t be easily convinced to come into an office.
The Public Service Alliance of Canada, for one, continues to argue against a federal mandate of a minimum of four days in office.
“We know a one-size-fits-all mandate is not working,” said PSAC president Sharon Desousa. “Right now, there aren’t enough desks, enough space or even a plan.”
Ultimately, she said, there is no data to show an increase in productivity. At the same time, her union puts the price tag at $16 billion for the federal government to bring employees back to the office.
“It’s affecting people’s mental health,” she said. “They are asking people to come, and you may or may not have a workstation, and it doesn’t mean it is probably set up for you. And because your team is spread out across Canada, you are coming in to use a virtual platform to interact.”
• Email: gmarr@postmedia.com