There's rarely a dull moment in Toronto's real estate world, and the fallout from the pandemic has only accelerated trends already underway in residential and commercial real estate.

1. Major Economic Shift

Toronto is in the midst of a major economic shift. Two years after lockdowns emptied the city centers, people are again catching games at the Ball Park, crowding into concerts, strolling through parks and gathering for major meetings and conferences. But a critical element remains missing: the hundreds of thousands of workers that once commuted into the city every weekday. That's forcing a complete restructuring of the downtown Toronto economy.

2. Increasing Interest Rates

Mortgage rates are pricing out more homebuyers already facing rising prices and limited inventory. The effect of rising mortgage rates is starting to ripple through Toronto's single-family home market. After the historically low rates fueled a frenzied buying boom last year, higher mortgage rates, rising home prices and limited supply of new homes are forcing some would-be homebuyers to sit on the sidelines. The expectation is that higher rates will start to pump the brakes on home sales in Toronto, which so far are only modestly slower. However, prices are still expected to remain relatively high as the inventory of homes on the market stays tight, and homebuilders face construction delays in getting new homes on the ground.

3. Office Spaces are Transforming

Hybrid work is reshaping how companies use the office. For many office workers, commuting into the office is now optional or at least only a part-time requirement. That's pushing some firms to rethink how they use office space, with some companies redesigning their office spaces to facilitate more collaboration and team work when people do come into work. Other companies are choosing to downsize their space requirements, meaning that even with oil priced above $100 barrel, the Toronto office market can't expect a big boom. Meanwhile, some firms are increasing their use of co-working space as a more flexible option than a long-term lease that allows workers to separate their home and work lives. Offices with large outdoor spaces are also a key draw for office tenants post-pandemic.

4. Sustainability and Climate Change

Sustainability is becoming a bigger focus for commercial developers. The real estate sector is a major but often overlooked driver of climate change, according to a U.N. report, but developers are trying to reduce their emissions. The focus on sustainability comes as more office tenants are emphasizing environmental effects in their office search, with companies like TD Canada and BMO seeking out sustainable offices recently in Toronto.

5. Affordable Housing

The suburbs are no longer a sure-fire way to access affordable housing. Now homebuyers searching for affordability in Toronto's sprawling suburbs will have to drive farther and farther out to find it. Strong demand and limited inventories are pushing up prices rapidly in suburbs like Kleinburg, which now has two of the hottest postal codes for real estate. The suburbs are losing their reputation as an affordable haven. Meanwhile suburbs such as Brampton and Oshawa also are becoming less affordable for renters too.

6. Build-To-Rent

Build-to-rent activity continues to grow. With nearly half of Torontonians unable to afford to buy a home here, that is only increasing demand for single-family rentals. While some institutional investors are scooping up single-family homes to turn into rentals, other developers in Toronto are building master-planned single-family rental communities.

7. Vacant Buildings

Developers are giving new life to underused or vacant buildings. Adaptive reuse projects - which convert often-vacant buildings into new uses - are another way developers are reducing climate effects of construction in projects.

8. Healthcare Development

Life sciences is driving more commercial real estate demand. More commercial developers are betting on a rise in life sciences as the sector starts to grow in Toronto, with developments greatly expanding the amount of life sciences and medical office space available in Toronto. However, even with this rising interest in biomedical research space, it will still be difficult to turn Toronto into a biotech hub.

9. Relief Funds

Evictions are still rampant and rental relief is running out. After the pandemic pummeled the Toronto economy, government and charitable agencies moved to disperse rental relief funds to struggling renters. But as of June 2022, only several million in federal rental relief funds remained, and that is quickly getting used even as the risk of eviction remains elevated for many.

10. Rental Scams

Rental scams are on the rise. Soaring rental prices are forcing some tenants to move to find a place they can afford, but when some renters find a good deal on a rental unit, it really can be too good to be true. The rise in rental scams spreading throughout Toronto as desperate tenants try to find a place they can afford right as scammers have gotten more tech savvy. Landlords are also getting scammed.