FIGURES|WATERLOOREGIONOFFICE|Q42025CBRE

Vacancydropsamidareboundin

absorptionheadingintoyear-end

v17.7%v$16.3817K94K

VacancyRatePSFAvg.AskingLeaseRateSFUnderConstructionSFNetAbsorption

Note:Arrowsindicatechangefrompreviousquarter.

Overview

–Theyearclosedonastrongnotewithpositivenetabsorptionofmorethan94,000sq.ft.,

reversingatwo-quartertrendofnegativenetabsorption.Suburbanmarketsaccountedfor82,000sq.ft.ofthisgrowth,whilethecorecontributedanadditional12,000sq.ft.

–OverallvacancyposteditsfirstdeclinesinceQ12025,dropping60basispoints(bps)to

17.7%.Suburbanvacancyimprovednotably,falling70bpsto12.2%,thelowestlevelsinceQ1

2023and100bpsbelowsametimelastyear.Conversely,corevacancyclimbedto31.1%,up

180bpsfromyear-end2024.

–WellingtonRegion’savailabilityratedeclinedsharplyto8.9%,representinga230bps

decreasefromthepreviousquarterandreturningtolevelslastseenatthestartoftheyear.IncontrastWaterlooRegionhasremainedrelativelystablein2025.

FIGURE1:WaterlooRegionFundamentals–HistoricalAnalysis

NetAbsorptionandNewSupply(000ssq.ft.)VacancyRate(%)

400

300

200

100

0

-100

-200

-300

-400

Q1Q2Q3Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

Q1Q2Q3Q4

2020

2021

2022

2023

2024

2025

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

-20.0%

NewSupplyNetAbsorptionVacancyRate

Source:CBREResearch,Q42025.

1CBRERESEARCH?2026CBRELimited

FIGURES|WATERLOOREGIONOFFICE|Q42025

2CBRERESEARCH?2026CBRELimited

Vacancycontinuestoleveloffassubleaseshareholdssteady

TheoverallvacancyratedecreasedslightlyinQ42025to17.7%,reflectingstableconditions

followingearlierfluctuationsintheyear.Vacancylevelsvariedbyassetclass,withClassAat

18.4%,ClassBat21.2%,ClassCat3.1%,andClassRCat20.1%.Whileeachclassexperienced

onlymodestquarter-over-quartermovement,themarketbenefitedfromstrongerQ4absorptionthathelpedpreventfurtherupwardpressureonvacancy.

Subleasespacecontinuedtorepresentanotableportionofavailableinventory,accountingfor10.1%oftotalvacantspaceinQ4.Class-levelresultsshowedsubleasesharesof8.7%inClassA,14.4%inClassB,and0.0%inbothClassCandClassRC.Asmoretenantssecuredupgraded

spaceatcompetitiverentallevels,thesubleasesharestabilizedbytheendofthequarter,evenasoverallavailabilityremainedelevatedacrosstheregion.

AstrongfinishtotheyearforMidwesternOntario

WaterlooandWellingtonRegionsended2025onastrongnotesimilartohowtheyearbegan,posting94,000sq.ft.ofpositivenetabsorptioninQ4,andreversingthedeclinesseenintheprevioustwoquarters.Availabilityeasedslightlyto20.9%,whilevacancydecreasedto17.7%,supportedbyconsistentleasingactivity.Asthetransitiontowardfullin-officeattendance

acceleratesandmorecompaniesmandateuptofourdaysperweekonsite,demandforlargeofficespacesisexpectedtostrengthenfurther.Subleasespaceclosedtheyearat292,000sq.ft.,a77,000sq.ft.reductiontowhereitwasinQ12025.Directvacancydecreasedcloseto2.6millionsq.ft.,thoughoverallmarketconditionsshowedsignsofstabilization.

Theregionrecorded29,000sq.ft.oftotalnetabsorptionthroughouttheyear,amodest

improvementthatreflectedrenewedtenantmovementacrossmostsubmarkets.GuelphandKitchenerledthepositiveshiftthisquarter,whileWaterlooandCambridgeshowedearly

indicationsoflevelingout,andGuelphexperiencedthemostnotablechangeinvacancy.With16.3millionsq.ft.oftotalinventory,themarketappearspositionedforgradualstrengtheningheadinginto2026.

FIGURE2:DirectVersusSubletHistoricalVacancy(MSF)

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

20122013201420152016201720182019202020212022202320242025

DirectSublease

Source:CBREResearch,Q42025.

FIGURE3:2025Quarter-Over-QuarterNetAbsorptionbySubmarket(000ssq.ft.)

80

60

40

20

0

-20

-40

-60

-80

-100

Q1

Q2

Q3

Q4

Waterloo

Kitchener

Guelph

Cambridge

Source:CBREResearch,Q42025.

FIGURES|WATERLOOREGIONOFFICE|Q42025

3CBRERESEARCH?2026CBRELimited

FIGURE4:OfficeMarketStatistics

Submarket

Inventory

(SF)

Vacancy

Rate

(%)

Under

Construction

(SF)

Quarterly

Net

Absorption

(SF)

Net

Absorption

YTD(SF)

Avg.Net

Asking

LeaseRate

($PSF)

Core

3,156,384

43.7%

0

919

-90,262

$17.08

Suburban

2,831,626

5.0%

0

19,281

-14,704

$14.63

KitchenerTotal

5,988,010

25.4%

0

20,200

-104,966

$16.84

Core

671,903

6.7%

0

-6,088

-8,244

$16.28

Suburban

5,612,230

19.6%

0

22,167

68,706

$15.99

WaterlooTotal

6,284,133

18.2%

0

16,079

60,462

$16.00

Core

350,557

6.3%

0

0

-2,145

$10.00

Suburban

1,411,489

4.5%

0

9,301

12,823

$12.97

CambridgeTotal

1,762,046

4.8%

0

9,301

10,678

$12.20

Core

538,520

4.0%

0

17,368

18,009

$15.30

Suburban

1,747,833

6.4%

17,000

31,283

44,532

$17.03

GuelphTotal

2,286,353

5.9%

17,000

48,651

62,541

$16.75

OverallTotal

16,320,542

17.7%

17,000

94,231

28,715

$16.38

Source:CBREResearch,Q42025.

FIGURE5:NotableLeaseTransactions

Size(SF)

Address

BuildingClass

Submarket

DealType

16,587

215QueenStreetW

B

Cambridge-Suburban

NewLease

15,695

16AndrewStreet

B

Kitchener-Suburban

NewLease

14,969

410AlbertStreet

B

Waterloo-IdeaQuarter&R&D

NewLease

Source:CBREResearch,Q42025.

FIGURES|WATERLOOREGIONOFFICE|Q42025

MarketAreaOverview

KITCHENEROFFICE

72VictoriaStreetSouth,Suite200Kitchener,ONN2G4Y9

Contacts

MeganSolomon

ResearchAnalyst

/p>

Megan.Solomon@

CBREOffice

Kitchener

72VictoriaStreetSouth,Suite200

Kitchener,ONN2G4Y9

?Copyright2026.Allrightsreserved.Disclaimer:Informationcontainedherein,includingprojections,hasbeenobtainedfromsour