According to a new report from Avison Young, the Greater Toronto Area (GTA) office market experienced negative absorption in the first quarter of 2014.

Key trends in Avison Young’s First Quarter 2014 Greater Toronto Area Office Market Report showed a continuing pattern seen at the end of 2013. There have been five consecutive quarters of negative absorption in the GTA office market, which the report says has been a result of sporadic demand, paired with a stubborn sublet market.

“Though overall absorption levels have deteriorated over the past five quarters, we should not be sounding the alarm bells,” says Bill Argeropoulos, vice-president and director of research (Canada) for Avison Young.

Argeropoulos calls it a correction, which is the result of the market expanding over the past 10 years and other shifts in demographics and workplace design.

“For example, the trend for more efficient space planning means that tenants require less space to accommodate the same number of employees, possibly resulting in absorption figures below historical norms going forward,” he suggests.

More space has been vacated than leased during the past five quarters. A total of 1.3 million square feet has been vacated — an average of 254,000 square feet per quarter — but that amount pales in comparison to the 2001–2002 dot-com meltdown, which saw 5.8 million square feet returned to the market over six quarters.

Negative absorption has caused other leading indicators, such as availability and vacancy rates, to trend higher. In the first quarter of 2014, the vacancy rate across all building classes rose by 20 basis points to reach 9.4 per cent. It is expected to pass the 10 per cent mark in the coming quarters. Comparatively, the vacancy rate was 8.1 per cent in the same quarter of 2013.