Canada’s office market is developing a new problem after years of excess space: the best buildings are becoming harder to find, and few new ones are on the way.

National office availability fell to 15.1% in the third quarter as the construction pipeline shrank to 20 buildings totalling 1.7M SF, according to an Altus Group report released Wednesday.

Altus said the market had “entered a supply-constrained phase,” as demand for modern offices outpaced new deliveries. The shortage of large, contiguous blocks is increasing competition for premium properties and putting upward pressure on asking rents.

Toronto offers a clear example. Overall availability declined 190 basis points year over year to 15.1%, while downtown Class A availability reached 11.2%, Altus found.

Separately, CBRE reported that available downtown office blocks exceeding 100K SF have dropped from 26 to 12 since summer 2025, a squeeze illustrated by Wealthsimple’s lease at The Well.

In Montreal, Altus recorded 651K SF of positive net absorption and an overall availability rate of 16.1%. At the top end, CBRE found trophy vacancy had fallen to 3% or less after the city’s last large AAA office block was leased.

Elsewhere, Calgary still had the country’s highest availability at 20.5%, while Vancouver’s rate edged upward to 12.6%. Older Class B and C buildings continue to face leasing challenges.

Altus also highlighted an unusual completion: the 119K-SF office component of G Group’s Ellie development at 5250 Yonge St. in Toronto. It was delivered entirely unleased following construction under receivership, with lender Romspen owed more than $185M. The quarter’s other two office completions were fully leased.

With new construction scarce, Altus expects owners to focus increasingly on renovating existing buildings, while tenants seeking sizeable premium offices face earlier leasing decisions.

Pictured: The 119K-SF office component of the Ellie development at 5250 Yonge St. in Toronto was completed in the third quarter without any tenants, following the project’s receivership.

Source Connect Canada CRE Click here for the full story.