I’ve spent over two decades working with and advising some of the biggest names in commercial real estate. Today, I manage a portfolio of $400 million in commercial assets across Arizona, Colorado, and Canada. Though I live in Toronto, my focus remains firmly on both sides of the border. Lately, what’s caught my attention isn’t a rebound in the U.S. office market—but a rebalancing.
For the first time in 25 years, office supply in the U.S. is actually shrinking. Demolitions, conversions to residential, and a dramatic slowdown in new development are finally cutting into the glut of underutilized office buildings. According to CBRE, the U.S. will lose more than 23 million square feet of office space in 2024 alone. Compare that to just 6.7 million in 2019.
This isn’t just a market correction—it’s a long-overdue course reset. After years of cheap capital, inflated valuations, and unchecked development driven by tech optimism and federal incentives, the American office sector is getting leaner and smarter. And that’s not a bad thing.
The catalyst? A mix of falling prices, new zoning flexibility, and real government incentives for conversions. In New York, developers like Scott Rechler are turning obsolete office towers into thousands of apartments—projects that would’ve been economically impossible five years ago.
Now here’s the real question: where is Canada in all this?
Toronto Still Has Its Head in the Clouds
Toronto’s office vacancy is hovering around 18%, just a shade better than the U.S. average of 19%. But unlike major U.S. cities, we’re not seeing serious momentum toward conversions or demolition. Part of this is policy inertia. Part of it is the financial structure of ownership—Canadian pension funds and institutions tend to hold through cycles, not exit or repurpose. And part of it is a planning culture that’s overly cautious about zoning changes.
Let’s be blunt: we’re behind. While U.S. cities are embracing creative destruction, Toronto still clings to the hope that white-collar workers will magically return five days a week and refill the towers.
The Opportunity Canada Is Missing
Imagine if we took some of our outdated Class B/C stock and repurposed it for housing. In a city starved for residential inventory—and drowning in record immigration—this could be game-changing. It won’t be easy: Canadian construction costs are high, and our regulatory path to adaptive reuse is slow and murky. But the U.S. is proving that with the right incentives, it’s possible.
The U.S. is also attracting institutional capital again. Blackstone’s recent $1.4B move into Midtown Manhattan shows that investors will still bet on office—if the fundamentals are strong and supply is capped. Meanwhile, Toronto still has major new office developments in the pipeline with few clear exit strategies.
A Cross-Border Perspective
I’m not bearish on office. I’m bearish on obsolete office. In Phoenix and Denver, we’ve already started pivoting, repositioning properties or halting acquisitions that no longer make sense. The conversations I’m having with lenders, city planners, and institutional partners in the U.S. are focused, realistic, and forward-thinking.
Toronto, by contrast, feels stuck in neutral—too slow to adapt, too hesitant to incentivize change, and too reliant on wishful thinking.
If Canada wants to stay competitive and build the housing supply it desperately needs, we need to treat this moment as an opportunity—not a threat.
It’s time to stop waiting for the old normal to return. Because across the border, they’re already building something new.