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What was Toronto’s commercial real estate market like in the before times?
It was tight, meaning a large chunk of properties were leased, which drove rents up. At the end of 2019, we had a commercial vacancy rate of 2.9 per cent. That’s ridiculously low, both historically and in comparison to other cities in North America. In a balanced market—one where neither landlords nor tenants have a major advantage—the vacancy rate is usually between six and 10 per cent. At 2.9 per cent, landlords have a big advantage because tenants don’t have a lot of other places to go. With so little space available, there’s a huge need for more office space, which is why there’s about 10 million square feet of office space under construction downtown. Because of that, we were expecting vacancy rates to rise to six per cent by 2021-2022. Then Covid happened.

And what impact did the pandemic have? 
It’s hard to tell. Commercial real estate is slow to react because leases are relatively long term, usually around five years. Right now, we’re watching the sublet market, which is up five to 10 per cent since the beginning of the pandemic. That isn’t much, but I think as we proceed, we’re going to see more space being subleased. More people are working from home, and some companies are experiencing financial hardship, so they’re going to evaluate their needs and put some of their excess space on the market. But even with subleasing, it takes time for companies to put plans in motion. It’s a big decision to vacate your space and put it on the sublet market, especially when there’s so much uncertainty. If a company gives up their space, then in three months’ time there’s a vaccine and everyone can go back to work, that company is not going to be happy. Especially since vacancy rates are relatively low and it’s going to be tough to find new space.