Office-to-Residential Conversion in Toronto
2 min read
Office-to-residential conversion is a growing trend in Canada, driven by the rising office vacancy in recent years. According to Avison Young, 20.5% of Toronto’s office space is currently available. The shifting demand for office space, particularly in major urban centres, has resulted in high vacancy levels, presenting an opportunity to transform under-utilized space for residential use and support the development of mixed-use buildings. In response to Toronto’s ongoing housing crisis, there has been an increase in proposals to add residential units above existing office buildings, convert offices into housing, or redevelop office properties entirely.
The federal government supports the transformation of under-utilized office and retail spaces into housing by doubling its 2021 budget to $600 million. They are also collaborating with municipalities to implement a fast-track permit system to accelerate the conversion of existing buildings. City of Toronto planning officials are reviewing municipal policy for updates that will enable easier office-to-residential or mixed-use conversions. Currently, the 2013 policy requires 100% replacement of removed office space; however, they are looking to reduce the replacement requirements to 25%.
Many existing proposals aim to reduce office space while introducing an average of 531 residential units, primarily through the conversion of lower-quality Class B and C office buildings. On average, these projects add approximately 35,000 square metres of gross floor area (GFA) for mixed-use purposes. Several factors contribute to making office buildings strong candidates for conversion. Key factors include building size, location, and feasibility of dividing floors into residential units. Properties situated in high-density neighbourhoods, such as Downtown Toronto, the Financial District, and Yonge-Eglinton, are favourable for conversion due to high walkability and proximity to surrounding retail and green spaces. These considerations enhance a building’s potential for successful conversion from office to mixed-use residential space.
With rising office vacancies and the increasing need for housing, office-to-residential conversions offer a strategic solution supported by the Canadian government and updated municipal policies.
References
City of Toronto. (2025, April 17). Office Space Needs Study. https://www.toronto.ca/city-government/planning-development/planning-studies-initiatives/office-space-needs-study/
Construct Connect. (2025, February 27). Toronto mustn’t fall into “analysis paralysis” for office-to-residential conversions. Daily Commercial News. https://canada.constructconnect.com/dcn/news/projects/2025/02/toronto-mustnt-fall-into-analysis-paralysis-for-office-to-residential-conversions
Convert Empty Office Space into Housing. Liberal Party of Canada. (n.d.). https://liberal.ca/our-platform/convert-empty-office-space-into-housing/
Immen, W. (2025, June 24). Inside the Race to Convert Vacant Offices into Rental Homes. The Globe and Mail. https://www.theglobeandmail.com/business/industry-news/property-report/article-inside-the-race-to-convert-vacant-offices-into-rental-homes/
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