Toronto’s financial district still hasn’t recovered from the pandemic — with one glaring exception

The study found the vast majority of office and retail buildings have not recovered to their pre-pandemic levels due to hybrid work, but most of the eight hospitality buildings tracked had a recovery rate of more than 100 per cent. Transit hubs such as Union Station also had a strong recovery rate, as did CIBC Square, which has a regional bus terminal on its ground floor. 

“Tourists have been a bright spot all over the city due to pent up demand from the pandemic,” said Karen Chapple, director of School of Cities and report co-author. “When you look north of Adelaide, there’s lots of tourist attractions, as well as the arenas and venues along the waterfront, which continue to attract visitors.” 

The median recovery rate for office buildings was 69 per cent, while retail trailed behind at 55 per cent. 

Travel ‘isn’t quite back’ to 2019 levels, but it’s close

Winnie Schroder, area director of sales and marketing at Omni King Edward Hotel — located on King Street — said it isn’t a surprise that hotels are recovering better than retail and office space as hybrid work continues to take a toll on businesses in the area.

While travel “isn’t quite back” to 2019 levels, she said, it’s close.

“In 2022 we saw pent-up demand for leisure travel, especially domestically, and last year we saw it level out as people were able to travel abroad.” 

Around 30 per cent of the hotel’s business derives from work meetings, conferences and group gatherings, she said, which has returned post-pandemic as workplaces want to provide networking opportunities in-person. 

The rest of the business relies on leisure travel and individual work trips — people who fly in for a day to two to meet with a client. 

Schroder said they’re expecting more travel from the U.S. this year, especially as the Canadian dollar weakens making travel north of the border more attractive. 

How will Toronto’s downtown reinvent itself? 

“They’ll often stay for a weekend or try and find good deals online and book last minute,” she said. “They need to feel like Toronto is a worthwhile destination for a fun weekend away, which we offer with our concerts, shows, and sporting events.” 

Consumers still want to pay for experiences and Toronto’s downtown offers the same sought-after attractions that drew in visitors pre-pandemic, said Carl Gomez, chief economist at CoStar Group Canada, a commercial real estate database. 

“What’s supporting retail is the visitors coming in who want to shop,” he said, “while the services that catered to the five-day a week workers are struggling like dry cleaners and others.” 

New figures from commercial realty firm CBRE shows 17.4 per cent of downtown office space is sitting empty, up from 15.8 per cent in the second and third quarters — the highest vacancy rate since 1996. 

It’s important to note when looking at the data citywide Toronto is still 12 per cent behind 2019 levels in terms of hotel occupancy, said Andrew Weir, executive vice-president of Destination Toronto. 

“The majority of the recovery happened in 2022 when the domestic market was strong and people wanted to travel within Canada,” he said. “But now more are travelling internationally. And big international visitors for us like the U.S. and China still aren’t close to 2019 levels.” 

While large work meetings and conventions have returned individual business travel is still lagging, he said, as many of those one-on-one meetings can now take place virtually. 

The biggest challenge for Toronto’s downtown is how it will reinvent itself and evolve to meet consumer demand, said Gomez. 

“That might mean turning old office buildings to something more attractive with restaurants and experiential services,” he said. “It’s a big undertaking.”