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Class B Office Buildings Prepare To Take Centre Stage

May 19, 2026 3 Minute Read

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Brendan Sullivan standing in front of a class B office building

Canada’s office market has been making a comeback as businesses lease more space, particularly within the Class A building segment, which in the first quarter recorded the lowest national downtown vacancy rate since 2022.

As the availability of quality space in Class A office properties begins to dwindle, CBRE Senior Vice President Brendan Sullivan says it’s a moment of opportunity for Class B buildings.

“We’re seeing very little new office construction in most Canadian cities,” says Sullivan, who is also the National Lead of Investor Leasing for Canada.. “That lack of new-build inventory means that as we see strong absorption in the top class of office buildings, the spillover effect will generate increased demand for Class B buildings over time.

“Forward-looking landlords are already positioning their properties to capitalize.”

Aligning Product For Future Demand

Buildings developed in the 1960s and 1970s were made to suit a completely different time.

“Offices now are designed with an array of advanced amenities and built to a considerably higher standard than the ones from half a century ago,” Sullivan says.

“Because of the evolving demands of businesses and their people, modern buildings emphasize experience: access to fitness, food and beverage, outdoor spaces, concierge services, natural light and fresh air, efficient floor layouts and state-of-the-art technology integration.”

Renovating older office buildings can be costly. Commercial construction in Ontario can range from $100 to $300 per square foot or more, with factors such as location, materials and existing site conditions influencing the final price.

“It’s a significant lift for an older vintage building to be retrofitted to accommodate the modern tenant experience,” says Sullivan, stressing that elevated management is essential if Class B office properties want to keep pace with higher-tier competitors.

“The key consideration for any landlord is to understand their tenant better than the tenant understands themselves,” he says. “It’s important to invest money in areas that are most significant for the end user of the office space, and not every investment needs to be capital intensive.

“We are advising our clients to look first at the margins before considering large-scale repositions – sometimes it’s the small things that can make the biggest difference.”

It’s often the most fully occupied buildings that generate the highest rents, Sullivan points out. “That tells us that tenants are astute, and the stats reflect that when the value proposition aligns with demand, returns are strong.”

Creative Strategies For Better Workplaces

Elevating the value proposition of an older office asset doesn’t necessarily have to involve massive capital investment, Sullivan says. But it does require the adoption of an enlightened workplace strategy, something that CBRE specializes in.

For instance, instead of spending tens of millions of dollars on a tenant lounge that will see limited use, landlords might do better to consider investing in lighting upgrades or repurposing underutilized spaces as conference centres or event spaces.

“We’re at a generational inflection point with how we use offices,” says Sullivan. “And this isn’t impacting only the top tier of office buildings. It’s affecting all of them.

“The future of office is now and the opportunity for landlords to meet the moment is here.”

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