Oxford Properties Group has secured one of the largest office leases this year in Toronto, renewing a long-term deal that calls for accounting and business services giant EY Canada to expand its downtown office footprint by 20% to 300,000 square feet.
The real estate arm of the Ontario Municipal Employees Retirement System, one of the largest pension funds in Canada, said the deal would maintain EY Tower at 100% occupied.
In a statement, Toronto-based Oxford heralded the deal at 100 Adelaide Street West as the downtown core's largest lease of the year.
Bradley Jones, senior vice president and head of leasing and operations in Canada at Oxford Properties, said in a statement the deal "highlights our belief that well-located, high-quality and sustainable buildings focused on wellness and employee experiences will continue to outperform."
CoStar data shows that the office vacancy rate in the financial core where the EY Tower is located is 11.7%, but that rate has dropped over the last two quarters.
"There is approximately 2.7 million square feet of new space being delivered elsewhere within the [central business district] by the end of 2025. This delivery of new space may harm the submarket fundamentals as tenants may be drawn from the financial core to nearby submarkets in search of newer office space," CoStar said in a report.
Ben Haythornthwaite, a CoStar market analyst, said the downtown Toronto office market continues to face availability woes, with over 15% of four- and five-star office space available for lease in the central business district.
"Landlords in Toronto are keen to collaborate with existing tenants on lease renewals and potential expansions to address the increased vacancy. Landlords shoulder costs that would otherwise be recoverable from the tenant when space in their building is vacant. So, there is an incentive on the landlord's part to lower net effective rents to mitigate this expense," Haythornthwaite said.
EY renewed its long-term lease as the anchor tenant at the eponymous tower while expanding by 50,000 square feet, bringing its total footprint in the building to over 300,000 square feet. Lease rates for the space were not disclosed.
"This new space is designed to bring our teams together in ways that foster collaboration, spark creativity and prioritize individual well-being — while also underscoring our commitment to creating a workplace where our people feel motivated and empowered to do their best work every day," said Janelle Walsh, director of administration and workplace services at EY Canada, in a statement.
Originally a 16-storey Art Deco commercial tower dating back to the 1920s, Oxford turned the redevelopment property into a 40-storey tower in 2017. The head offices of OMERS and Oxford are located in the building, along with the Toronto Stock Exchange.