Canadian companies paying premium rent in downtown Toronto towers are starting to look elsewhere. And what they’re finding is surprising. Office space inside regional shopping malls across Ontario is delivering lower occupancy costs, better amenities, and stronger employee retention than many traditional Class A buildings.
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Office rent in downtown Toronto is climbing back up. Class A vacancy has tightened sharply down to roughly 14.4% in early 2026 from over 18% the year before. Return-to-office mandates and shrinking available inventory hand landlords more pricing power.
For tenants renewing or relocating this year, that means less room to negotiate and rising total occupancy costs, particularly on TMI (the operating costs, taxes, and maintenance charges layered on top of base rent).
A growing number of Ontario companies are responding by looking somewhere landlords and brokers have historically overlooked: regional shopping malls.
Former cinemas, department store floors, and back-of-house zones inside regional malls are being converted into functional, often architecturally interesting office space.
Because this inventory doesn’t compete directly with downtown towers, it’s priced differently. And it comes with a built-in amenity base that most office parks can’t match.
Downtown Class A TMI commonly runs C$20–$35 per square foot; suburban and mall-adjacent space typically runs C$12–$20. On a mid-size lease, that gap compounds into a meaningful reduction in total occupancy cost–without the tenant giving up quality of space. (Exact savings depend on the specific property and lease structure)
Food courts, pharmacies, fitness options, transit access, and everyday errands are steps away rather than a lunchtime commute. For employers competing on flexibility and quality of life to bring people back to the office, that proximity is a tangible perk.
Daily friction of commute times, lack of nearby services, and an isolating office environment is a quiet but real driver of attrition. Mall-based office locations remove several of those friction points at once, placing retention as one of the more persuasive arguments for this strategy.
This approach tends to make the most sense for organizations that:
ENCOR Advisors specializes in strategic commercial real estate advisory for growing enterprises seeking operational efficiency, competitive advantage, and alignment with evolving market opportunities.
