Ontario’s Q4 2024 market update showed robust residential sales and modest price gains, with tightening inventory, mixed rental trends across urban centers, and diverse office market challenges – from high downtown vacancies in Toronto to improved suburban absorption in Ottawa and London. The industrial sector was buoyed by record new supply, increased availability, and strong net absorption.
Residential Summary for Q4 2024
An Edge Realty Analytics report in March reported that Ontario’s residential market in Q4 2024 revealed increased buyer activity and a tightening inventory landscape.
Sales
Residential sales in Ontario increased by 12.5% quarter-over-quarter and rose by 21.9% on a year-over-year basis, reflecting strong market demand.
Listings and Supply
New listings declined by 1.2% from Q3 2024, while active listings grew by 3.2% sequentially and by 23.2% year-over-year.
The sales-to-new listings ratio rose from 41.5% in Q3 2024 to 47.2% in Q4 2024.
The months of inventory – a measure of how long current listings would take to sell at the existing sales pace – rose slightly from 4.0 in Q3 2024 to 4.1 in Q4 2024, indicating a marginal slowdown in market absorption.
Prices
Home prices increased by 0.7% compared to Q3 2024 and by 0.2% year-over-year.
Under Construction
The volume of housing units under construction fell by 0.7% quarter-over-quarter and declined by 7.1% year-over-year, which may signal a slowdown in new development activity as market participants adjust to current conditions.
Economic Indicators
Ontario’s population grew by 0.3% from Q3 to Q4 2024 and by 2.2% over the past year. However, the unemployment rate increased from 6.9% in Q3 2024 to 7.3% in Q4 2024, and mortgage arrears edged up slightly from 0.16% to 0.17%.
Rental Market Update
Source: Rentals.ca
Source: Rentals.ca
Office Summary for Q4 2024
According to the CBRE, in Q4 2024, key markets saw increases in vacancies, although Class AAA properties in Toronto remained stronger with only a 7.6% vacancy rate.
Toronto
In Q4 2024, Toronto’s Downtown office market faced near-term headwinds. A combination of new supply being delivered vacant and the reintroduction of previously unavailable office space elevated the vacancy rate to 18.5%. Despite these challenges, return-to-office mandates and strong transactional activity during Q4 provided support for a potentially truncated recovery in 2025.
Trophy (Class AAA) assets in the downtown area maintained resilience, demonstrating a low vacancy rate of 7.6% driven by nearly 1.0 million square feet of net positive absorption over 2024. Overall weighted average asking net rents have hovered near $35.00 throughout 2024, although high inducements indicate that tenant leverage continues to place downward pressure on net effective rents.
In the Toronto suburban office market, the East market was the primary driver of positive absorption, while the West and North submarkets experienced negative absorption. Throughout 2024, the suburban market recorded a cumulative net positive absorption of 9,000 square feet, for the first positive outcome since 2019. Vacant sublet space declined for the fifth straight quarter to 2.7 million sq. ft., making up 16.9% of total vacancies.
Ottawa
In Ottawa, the office sector faced some challenges in Q4 2024. The market recorded 105,000 square feet of negative net absorption as the overall vacancy rate increased from 12.2% in Q3 2024 to 12.4% in Q4 2024. The Central Business District submarket experienced a rise in vacancy, from 13.1% to 13.9%, resulting in a negative net absorption of 121,000 square feet.
Class A office buildings saw their vacancy rates climb from 11.6% to 12.5%, with a corresponding negative net absorption of 97,000 square feet, largely driven by increased federal vacancy at key assets.
London
London’s office market in Q4 2024 recorded a slight contraction, with city-wide net absorption coming in at negative 22,000 square feet—contributing to a cumulative year-end net absorption of negative 239,000 square feet. The current vacancy rate stands at 26.2%, though anticipated high-rise developments in the core may help lower this rate. Office-to-residential conversions are ongoing, supported by the city’s incentive program, which provides grants of up to $35,000 per unit to reduce development costs. Average asking net rental rates in London remained virtually unchanged, ending 2024 at $13.77 per square foot.
Industrial Summary for Q4 2024
Toronto
Toronto’s industrial sector continued to grow in Q4 2024. The market recorded 2.9 million square feet of positive net absorption during the quarter. Throughout 2024, a notable 14.2 million square feet of new industrial supply was delivered, with 6.9 million square feet completed in Q4 alone. As a result, the overall availability rate increased to 4.7%. Asking net rents declined for the fifth consecutive quarter, ending the year at $17.18 per square foot, for a 5.9% decrease year-over-year.
Looking ahead to 2025, the CBRE projects 10.2 million square feet of new supply, with less than 7.5 million square feet expected to remain available.
Ottawa
Ottawa’s industrial market saw its availability rate rise from 2.6% in Q3 2024 to 3.1% in Q4 2024. Average asking rents in this segment reached an all-time high of $16.62 per square foot, representing a 4.5% increase from Q3 2024 and a 7.6% year-over-year rise.
In Q4 2024, 505,000 square feet of new industrial supply was delivered across six projects, bringing the total new supply for 2024 to 532,000 square feet. An additional 459,000 square feet remain under construction across the South and Deep West nodes. Additionally, 4.4 million square feet of industrial space is planned for 2025, with 81.1% of the proposed inventory located in the South.
London
In London, Ontario, the industrial availability rate increased to 2.8% from early 2023, when it had reached a record low of 0.6%. Despite an overall availability rate nearing 3.0%, the market achieved a positive net absorption of 580,000 square feet in Q4 2024. Net rental rates reached an all-time high of $10.37 per square foot, driven by limited availability and the introduction of higher-quality products. 135,000 square feet of industrial space is currently under construction in East London, encompassing both expansion projects and design-build initiatives.
