Canada: Outlook 2026
Canada’s commercial real estate market outlook for 2026 is looking bright.
To establish a deeper understanding of real estate sentiment as it stands for the year ahead, we surveyed close to 200 Avison Young professionals across Canada.
The result? Resounding positivity, with 97% of professionals surveyed anticipating activity to remain the same or better across market.
Further interest rate cuts by the Bank of Canada could positively stimulate investor appetite. Meanwhile, we are keeping a watchful eye on tariff measures. In recent months, we have observed some slowdown, largely driven by declining exports in sectors closely tied to U.S. supply chains, such as automotive and machinery. Should factors around inflation and employment rates remain positive to neutral, there’s tremendous opportunity for markets across Canada to continue their active recoveries, and plan strategically for growth in the year ahead.
Source: Avison Young Professionals
Note: Gauge charts represent the overall sentiment of the Avison Young real estate professionals who were surveyed.
Retail is expected to see some resurgence across markets impacted by upcoming return to office mandates, which are set to boost downtown vibrancy, enhance safety, and support ground-level businesses. Retailers that are notably in demand? Grocery and health, wellness, or medical.
Source: Avison Young Professionals
Multifamily is expected to see more cautious optimism than other sectors as pricing gaps between buyers and sellers remain, and industrial is expected to maintain optimism across major fundamentals.
What is your overall outlook for real estate projects and construction for 2026?
Developers may pause due to...
Developers may start new projects due to...
Source: Avison Young Professionals
Building on the momentum that began in the second half of 2025, we anticipate continued improvement in activity as we move through 2026 with plenty of options ahead.
Factors driving growth
The commercial real estate market in Vancouver is looking toward 2026 with cautious optimism.
Vancouver’s resilience, low office vacancy, and recent major trades signal both stability and opportunity in the months ahead, with office and industrial leading recovery, retail maintaining strength, and investor sentiment improving as pricing discovery narrows.
Outlook for 2026
There are clear signs of recovery across most asset classes, with belief that the market has reached its bottom and is now trending upward.
There are great expectations of improvement by late next year, supported by growing activity in Ontario and early signs of office and industrial momentum.
In fact, more than 95% of Avison Young’s Vancouver office professionals surveyed expect market activity to be the same as the second half of 2025 or even better in 2026.
Given this potential, it could benefit significantly to be proactive as the market transitions, with possibility for even more activity depending on how upcoming national interest rate cuts, budget decisions, and policy changes play out.
Sector snapshots
Office concessions are trending down nationally, though Vancouver remains situational. Trophy assets maintain strong demand regardless, but many landlords are finding a need to offer inducements for more challenging spaces.
The highest amenities in demand? Proximity to fitness centres and local transit lines.
Which office amenities are in the highest demand for tenants?
Source: Avison Young Professionals
Vancouver continues to hold some of the lowest office vacancy rates in North America. This paired with several major trades recently shows a renewed interest in office investments, which could see a significant rebound in Vancouver in 2026.
On the industrial side, leasing – particularly for large blocks of space, which remain scarce and sought after – is strong and expected to grow, while small bays face slower recovery because of broader economic uncertainty.
Retail continues to perform well, with no downturn expected, and activity should be stable or increased.
The multi-family market is expected to shift toward a more tenant-friendly environment over the next 12 months, driven by rising vacancies, increased supply, and slowing immigration. We anticipate a significant increase in deal velocity as vendor expectations continue to adjust downward, aligning more closely with buyer pricing and ultimately unlocking liquidity in the market.
Vancouver remains well-positioned for growth.
With strong fundamentals, limited supply and clear signs of recovery, opportunities in this market far outweigh its challenges as we head into 2026.
Factors driving growth
Montreal’s commercial real estate market outlook for 2026 is one of renewed optimism, so long as financial or economic disruptions like inflation and unemployment rates are kept at bay.
Improving stability, lower interest rates and clearer market conditions following recent economic uncertainty are all driving a surge in confidence across sectors, with 100% of Avison Young professionals surveyed are expecting activity to remain the same as or better than the second half of 2025 in 2026.
Outlook for 2026
Of that group, 74% anticipate activity will increase.
What’s driving this surge? Some assets remain undervalued, creating openings for opportunistic buyers willing to act before institutional capital flows back into the market.
Adding momentum are recent infrastructure improvements, including Montreal’s new light rail system, which is enhancing downtown’s accessibility and supporting return-to-office efforts.
This is essentially significant as transit access and walkable amenities top our list of office amenities in highest demand for tenants.
Which office amenities are in highest demand for tenants?
Source: Avison Young Professionals
Sector snapshots
Within the office sector, landlords who invest in upgrades and tenant-focused amenities will gain a clear competitive edge, while all tenants who move quickly to secure quality space stand to benefit most. Those who hesitate risk being left with less-desirable options.
Industrial real estate tells a similar story, where landlords offering competitive rental rates and tenant inducement packages will see stronger leasing activity. But there’s also an expectation that, regardless, industrial performance will improve year-over-year compared to 2025.
Multifamily remains attractive despite conservative rent growth expectations, which could influence long-term valuations. Recent Federal budget measures aimed at stimulating investments could benefit multi-residential sectors, though they may also create pressure on construction resources – time will tell.
Montreal is poised for growth as we look toward 2026.
With thoughtful planning, decisive action, and the agility to seize opportunities in a shifting market, investors and occupiers alike can expect a landscape rich with possibilities. The year ahead will reward those who move quickly and strategically, because in a market full of promise, timing is everything.
Toronto Downtown
Factors driving growth
Following a difficult 2025, fundamentals are looking up across Toronto’s commercial real estate market for 2026.
In fact, according to Avison Young professionals surveyed, 74% think activity will be up in the new year, with an additional 24% expecting activity levels to be similar to the second half of 2025.
Greater Toronto
Outlook for 2026
Improving conditions
The federal budget’s focus on infrastructure spending and Canada-first policy has the potential to stimulate economic growth and create opportunities across both major and secondary markets – as do various return-to-office programs introduced by major employers, such as banks and government agencies, which are driving increased foot traffic, traction and improved vibrancy across the downtown core.
Sector snapshots
Within the office sector, increased leasing market activity is expected to benefit trophy office assets (which already have extremely low vacancy rates) the most, as well as A-class towers. While B- and C-class properties may continue to struggle with higher vacancies, improvement is anticipated for those assets as well, as more companies bring employees back to the office. There’s a continued flight to quality, and what’s driving that is tenants’ search for highly amenitized spaces and well-located buildings. Those who prioritize key amenities and inducements – including walkability and ready access to transit – as part of their workplace strategies will benefit in 2026.
Which office amenities are in highest demand for tenants?
Source: Avison Young Professionals
However, challenges will remain, particularly around supply constraints for high-quality office space, which could make it difficult for tenants to expand or relocate. For landlords, this scarcity represents an opportunity to capitalize on strong demand and position assets strategically.
On the retail side, markets across downtown Toronto are poised to benefit significantly from the office market’s resurgence. As more workers return to offices in-person, restaurants, shops and service providers in the urban core will experience higher demand, creating a more dynamic environment for occupiers and investors alike.
Toronto Downtown is moving into 2026 with optimistic energy
With strong fundamentals in place and a potential shift toward recovery and expansion anticipated in 2026, both landlords and tenants who plan proactively and are quick to act could see notable success across the market.
Joe Almeida
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- Principal, Managing Director Ontario, Broker of Record, Avison Young Commercial Real Estate Services, LP, Brokerage
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- Corporate Executive
GTA Suburban and South Western Ontario
Looking ahead to 2026, the GTA Suburban and South Western Ontario markets remain cautiously optimistic. Momentum is building, driven by monetary policy tailwinds, industrial resilience, strategic occupier behaviour, and a continued flight to quality in office.
The Bank of Canada’s rate cuts (2.25%) are restoring some investor confidence and unlocking transaction momentum. Lower borrowing costs are giving companies room to make more intentional real estate decisions.
But headwinds remain. Trade policy uncertainty, labour constraints, cautious capital deployment and power/infrastructure limitations are all shaping decision-making.
Tariffs on goods and manufacturing components are influencing the decisions made by businesses that operate in the GTA industrial market. For occupiers, this creates hesitation around real estate decisions. For landlords and investors, it introduces greater underwriting risk: particularly around tenant covenant and lease-up timelines.
Demand for power is rising, and securing adequate capacity, especially for advanced manufacturing, will be one of the region’s biggest challenges heading into 2026.
Sector snapshots
Across our industrial and office asset classes sentiment is positive with most of our brokers anticipating an uptick in market activity as we move into 2026 compared with the first half of 2025.
Industrial real estate remains a cornerstone of growth across the GTA. While demand for logistics and manufacturing space was tempered earlier in 2025, we’re seeing renewed momentum as we close out the year. This is partly driven by nearshoring strategies and ongoing supply chain optimization. Leasing velocity is improving, and investor interest in the sector continues to be evident. Industrial fundamentals will remain top of mind for both occupiers and capital markets in 2026.
While overall office demand remains tempered, we’re seeing a clear trend toward high-quality, amenity-rich environments. Tenants are prioritizing transit access, walkable amenities, and wellness features, signaling a shift toward experience-driven workplaces.
Finally, while retail and multifamily sectors have been more subdued through 2025, we expect those sectors to remain steady with selective opportunities heading into 2026.
The GTA Suburban and South Western Ontario anticipate a cautiously optimistic year ahead, especially for the industrial sector
Industrial occupiers remain in the driver’s seat because they now have options. To compete and lease faster in 2026, landlords should:
- Be flexible on structure, not just rent.
Offer creative deal structures: expansion and contraction rights, phased occupancy, blend-and-extend solutions, and early termination options tied to business events. Flexibility is now a differentiator. - Make your buildings easy to say “yes” to.
Invest where it matters: power readiness, loading efficiency, parking, and modern tenant improvements. These features shorten decision cycles and reduce friction for occupiers. - Spend strategically.
Not every asset warrants a full upgrade. Know which properties justify capital investment and which require a different strategy (whether that’s repositioning, repurposing, or holding steady). - Negotiate structure, not just price.
Tenants with strong credit can secure highly favorable rights while landlords compete for stability. Expansion/contraction options, phased occupancy, and early termination tied to business triggers can provide agility in uncertain cycles. - Validate power capacity early.
Automation, cold storage, and advanced manufacturing require future-ready power, not just what is available today. Confirm that sites can support tomorrow’s operational demands before committing. - Choose locations based on labour, not rent.
Workforce maps are shifting. Prioritize locations where your talent currently lives and where emerging labor pools are projected to grow. Proximity to skilled labor will outweigh marginal rent savings.
It’s a rare moment in time to be proactive rather than reactive, full of growth and opportunity for those able to bet on optimism in 2026. It could be just what sets owners, investors and occupiers apart in the new year.
Factors driving growth
Ottawa’s commercial real estate market outlook for 2026 is one of encouragement and optimism.
It’s evident on the ground, as the city’s streets and office buildings are seeing a noticeable uptick in activity supported by federal return-to-office programs bringing employees back to the downtown core and other office markets like Kanata, creating a renewed sense of vitality.
Outlook for 2026
Among Avison Young professionals in the market, 100% of those surveyed think activity will be the same or better next year, with 75% leaning toward activity increasing in 2026.
While the federal budget includes plans for public-service workforce reductions, there’s a sense that these changes will have minimal immediate impact on Ottawa’s office market because many departing employees already work remotely or are nearing retirement.
Sector snapshots
Tenants in Ottawa’s office markets face challenges in securing quality space, as premium buildings have much lower vacancy rates than the market average. A focus on creating and providing access to amenities could help create a competitive edge – both for landlords looking to secure tenants, and for companies seeking to attract and retain the best employees.
Which office amenities are in highest demand for tenants?
Source: Avison Young Professionals
Growth in defence and related industries is expected to offset any workforce declines in the public service, with companies in sectors such as aerospace and security continuing to expand their presence across the market.
Ottawa’s strong fundamentals signal opportunities ahead in 2026
Across office, retail, and select industrial markets, strong fundamentals and a range of opportunities mean that both owners and occupiers are well-positioned for a year of growth and recovery.
Joe Almeida
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- Principal, Managing Director Ontario, Broker of Record, Avison Young Commercial Real Estate Services, LP, Brokerage
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- Corporate Executive
Factors driving growth
Following a cautious 2025, the 2026 outlook for Edmonton’s commercial real estate market is optimistic, with activity expected to increase across nearly all asset classes.
Investors and occupiers are moving from observation to action, driven by attractive incentives in the office sector, such as generous tenant improvement allowances and free rent packages.
Outlook for 2026
Population growth, particularly record-setting interprovincial migration, is fuelling confidence among developers and employers, creating vibrancy in hospitality and supporting a strong workforce.
While rising construction costs remain a concern for new industrial and retail developments, they present opportunities for strategic acquisitions at reduced prices.
Local private investors are emerging as dominant buyers, taking a long-term view, while institutional owners are largely selling.
All of this is contributing to marked confidence in market conditions, with 95% of Avison Young professionals surveyed anticipating at or above current activity levels in 2026 across the market.
Sector snapshots
Edmonton’s office market is on the onset of recovery, driven in large part by attractive incentives and investment in amenities, notably access to fitness centres, walkable amenities and conference facilities.
Which office amenities are in highest demand for tenants?
Source: Avison Young Professionals
The key challenge right now with office? Owners who purchased office buildings between 2010 and 2020 who are facing stress from high vacancies and refinancing costs, creating acquisition opportunities for new investors.
Anticipated return to office mandates are expected to boost downtown vibrancy, enhance safety, and support ground-level businesses.
Industrial and retail sectors are both facing concerns over rising construction costs for new centres, while also experiencing rising activity levels, giving way to cautious optimism for both sectors, as demand remains strong.
Edmonton showing positive signals for 2026
New ownership strategies and sustained population growth are signalling a promising year ahead, especially for those that prioritize tenant experience through modern amenities and vibrant neighbourhoods. They will see a realisation of growth and recovery in 2026 across the market.
Factors driving growth
Calgary’s real estate outlook for 2026 remains strong, with 93% of survey respondents expecting market activity to hold steady or increase in the new year. This confidence is underpinned by strong economic fundamentals, with Calgary’s GDP projected to grow by nearly 2.5%, almost double the national average.
This is, in part, because the city’s economy has evolved beyond its traditional reliance on energy, embracing diversification in sectors such as technology, aerospace, aviation, food manufacturing and advanced distribution.
Outlook for 2026
Population growth also remains a major driver, positioning Calgary as one of Canada’s leading cities for in-migration. People are choosing Calgary not only for employment opportunities but also for quality of life and cost advantages compared to other major centres.
Challenges persist, including rising costs for labour and materials, geopolitical uncertainty, and the need to navigate policy changes following recent federal and municipal elections. However, these challenges create opportunities for those prepared to act. Interest rates have declined significantly over the past year, and further cuts are anticipated in early 2026. Lower borrowing costs, combined with attractive cap rate spreads, make Alberta an appealing environment for investors seeking yield across multiple asset classes. For occupiers, the current market offers flexibility and choice, particularly in office, where a flight to quality is shaping demand. While downtown and suburban office markets are still stabilizing, activity is expected to hold or improve, presenting opportunities for tenants to secure premium space at competitive terms.
Sector spotlight
Growth in population supports sustained demand for multifamily housing and retail, while industrial benefits from a fresh, skilled workforce and strategic location.
Calgary’s younger demographic and strong educational institutions, including two universities and a leading tech college, are also helping to ensure a pipeline of talent for employers, reinforcing the city’s appeal for office and industrial occupiers. Increased diversification of sectors across Calgary is also fuelling demand across asset classes, particularly in industrial and multifamily markets, which continue to outperform thanks to Calgary’s affordability and availability of land.
Industrial remains Calgary’s standout performer, with growth in manufacturing, distribution and logistics driving demand for modern facilities, making it an ideal time to secure industrial assets or expand operational footprints.
The office market continues to stabilize, with activity expected to maintain or improve in both downtown and suburban areas, with flight-to-quality shaping demand as tenants seek modern, amenity-rich spaces to attract and retain talent.
Which office amenities are in highest demand for tenants?
Source: Avison Young Professionals
Calgary is shaping up for a year of strategic advantage in 2026
With affordability, growth, and diversification all improving for Calgary, 2026 is shaping up to be a year of strategic advantage for those ready to move forward. Informed decision-making will be critical but for those that understand Calgary’s nuances and current complexities, there’s plenty of room to unlock opportunity and value across all property and portfolio types.
Conclusion
As we compare against the second half of 2025, and look ahead to 2026, we are approaching the year with strong optimism, poise for recovery, and resilience across markets. While each city faces its own unique dynamics and challenges ahead, several common themes emerged from our conversations with leaders.
National policy, including budget decisions and upcoming return-to-office mandates, are impacting projections, with many anticipating improved vibrancy within city cores as a result, positively impacting especially our retail and office markets.
Population growth continues to be significant shaper in cities like Calgary and Edmonton, and a there’s a strong “don’t wait” investment outlook, as many say the time to act and invest is right now.
Institutional investment is on the rise, with reminders to prioritize strategy, operational resilience, and time-sensitivity across all markets.
What’s continuing to serve as a cornerstone toward recovery? Industrial, where strong demand for large bays, nearshoring strategies and supply chain optimisations support broad optimism and increased leasing and investment potential in the year ahead.
Overall, Canada’s commercial real estate market is well-positioned for a 2026 comprised of recovery and growth for those willing to take chances, act fast, and optimise their property portfolios, with improved resilience and growth ahead.
Questions? We'd love to hear from you.
Marie-France Benoit, MBA
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- Principal, Director Market Intelligence, Canada
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- Research
- Market Intelligence
