Over the last six months, real estate salesperson Andrew Van Buskirk kept encountering a specific kind of client.
They were typically in finance, earning upwards of $370,000 a year with a perfect credit score, coming to him to find a condo to rent in Toronto’s downtown core.
Their employer was mandating they return to work in-person full-time, but they didn’t live in Toronto anymore after buying a property in the GTA suburbs, or just outside of it, during the pandemic.
They wanted a home base in the city during the work week, but not the commitment of owning two properties.
They could easily buy a condo, but they don’t want to risk of buying during a condo crash.
And they wanted to wait and see if the demand to work in-person full-time will stick around for good, before uprooting their lives or their family.
“The level of applicant is astounding,” he said.
As tens of thousands of employees are being called back to work from their offices full-time, it’s having a direct impact on Toronto’s real estate market — especially downtown rental.
The growing number of workers moving back to the city in finance, tech, law and government is luring high-income earners back to Toronto. But those who bought property outside the city during the pandemic don’t want to sell their home in a down market or uproot their families, so are choosing to rent in the downtown core, instead.
It’s part of a growing shift taking place in Toronto’s housing market, as affordability concerns and a precarious market lead more people to rent instead of purchase a property.
Rental volume in 2025 was the highest it had been in four years, according to the Toronto Regional Real Estate Board (TRREB). High leasing activity in the second half of 2025 occurred in the city’s downtown core.
“Anything downtown is moving exceptionally quickly,” Van Buskirk said. “Two years ago it would take some time for units to get rented but now there are some good deals and competition building for tenants in the downtown core.”
Commercial leasing activity for office space has already picked up in the second half of 2025, with office vacancies expected to trend downward for the rest of the year, according to commercial real estate firm Avison Young.
It’s a trend that realtors say will continue well into 2026 as more workplaces mandate working in-person full-time, which began for Ontario government workers on Jan. 5.
Downtown condos being ‘swallowed up’ for rental
Tom Storey says his return-to-work clients have mostly been from the major banks — four of Canada’s Big Six banks have mandated employees come into the office at least four days a week.
“We had it a handful of times last year where the client said, ‘I work for the bank, I gotta be in three or more days a week so I have to rent,’” said the real-estate agent at Royal LePage Signature Realty in Toronto.
Like Van Buskirk, these clients had also bought a property outside Toronto during the pandemic when work was remote. They wanted a better commute into the office but didn’t want to buy a condo due to the unpredictable market. Renting allowed for more flexibility.
Amrit Walia, a realtor with Royal LePage Signature, said workers are looking to move to condo units that are close to the subway and can easily link up to the GO train, if they don’t wish to drive in from the suburbs and get stuck in Toronto traffic.
“There’s a lot more rental movement in 2025 compared to 2024 especially in transit-friendly downtown units — we’re seeing a lot of movement in those pockets,” Walia added.
According to TRREB, the total rental transaction volume from Jan. 1 to Sept. 30, 2025, was more than 57,700 units — a significant increase from 36,600 in 2022 during the same time period.
In the C01 area — from Bloor Street to the waterfront, and from Liberty Village to Yonge Street — there’s been a significant increase in rental activity. One bedroom leasing increased by 17.5 per cent in the third quarter of 2025 compared to the same time in 2024. Two bedrooms saw a 17.4 per cent rise, and three-bedroom units had a whopping 34 per cent increase during the same time period, according to TRREB’s third quarter rental reports.
The bigger units are seeing the most competition and being snatched up quickly as people want more livable space, and there’s fewer three-bedroom units available in the condo market, Walia said.
But, “basically anything in the downtown core, it’s been swallowed up,” said Van Buskirk.
“For some units we’re getting multiple offers, which we haven’t seen for a long time,” Van Buskirk said, adding that is providing some relief for condo investors who have struggled to find applicants for the last several years.
Shift to rent instead of buy to persist
Realtors said there’s a number of factors holding those mandated back to work from purchasing in Toronto.
Employees need to work in-person full-time for a prolonged period to ensure that buying in Toronto is the right move for themselves and their families.
“Leasing has just become a much more attractive option for people for the short-term because it’s less of a commitment,” Storey said.
In some markets outside of Toronto, if a homeowner bought during the pandemic they would now sell at a loss, which wouldn’t be financially viable for many people.
The condo market would also need to stabilize for them to want to buy a unit, as condo prices are forecast to drop 6.5 per cent by the end of 2026. They’ve already fallen by almost 20 per cent since the 2022 peak.
People are leasing for a year and then will see what the market looks like, Storey said. “The public perception of the condo market needs to improve before people dive into buying.”
If a worker is only living in their Toronto home part-time, as an owner they’d have to file the vacant home tax, which is a consideration and cost many don’t want to deal with, Storey said.
Another significant reason Van Buskirk’s clients are foregoing buying is because they’re waiting to see if full-time in-person work mandates will be in place long-term.
For many, the idea of entering into another lockdown isn’t entirely implausible.
“I think 10 years ago, no one had that fear that there’s going to be a virus and everyone is going to have to stay at home. Ten years ago, that would have never even entered my mind. I think people are still worried,” he said.
And while renting a hotel for two nights a week might be cheaper, having a rental does provide stability and normalcy when commuting into the city for work, Storey said.
Office vacancies trending down
Another factor giving workers pause is that workplaces need to ensure there’s enough space for workers to be in office five-days a week, which some are struggling to do.
While the province ordered government employees back to the office full-time on Jan. 5, Doug Ford said this week that he’s still working to ensure there’s enough space for them.
The mandates to work in-person three-to-five days a week is fuelling demand for office space in Toronto’s downtown core.
“Over the last six months there’s been a flurry of activity for companies to lease new space because they hired more people that now they don’t have space for,” said Avison Young Canada president Mark Fieder.
Triple A and Double A buildings are most sought after as employers trying to bring workers back want better amenities (such as concierge service, fitness centres, restaurants and parking) and proximity to transit, he said, especially for those with long commutes.
But even Class B, which are slightly older buildings, have steady leasing activity, as higher quality office spaces get snatched up.
The downtown commercial office vacancy rate stands at 15.9 per cent as of the final quarter of 2025, down from 18.6 per cent at the beginning of the year.
Avison Young forecasts that by the end of 2026, office vacancies should drop to around 12 to 14 per cent, similar to 2022 and 2023 office vacancy levels.
“It’s a trickle-down effect,” Fieder said. “As the leasing market improved, those Class B buildings could become Class A, as investors improve the building with better finishes, amenities, etc.”
There also isn’t any office space being built as high vacancy levels, construction costs, and zoning restrictions persist, which will lead to a tightening in the market as demand rises and supply diminishes, he said.
Rent prices won’t go up
Back-to-work mandates will continue to impact the new-build and resale markets, said Storey, as these workers join other prospective buyers choosing to rent.
But even with the extra demand for rental, experts don’t forecast that rent prices will increase over the next year.
“I don’t see rental prices going up because there’s so much supply,” said Walia, adding that a record supply of new condos — due to the pandemic presale boom when interest rates were ultralow — will hit the market this year.
In November, Toronto asking rents dipped to their lowest average price since 2022 at $2,521 a month, with one bedrooms costing $2,222 and two bedrooms costing $2,828, according to the national rent report by Rentals.ca and Urbanation.
And, analysts are confident prices will continue dropping on a year-over-year basis for the next few months, the report added.
“There’s this shift happening,” Walia said. “We’re seeing much more rental movement now compared to a year ago and that will continue.”
