Outlook 2026

Canada: Mid-Year Outlook 2026

At the mid-point of 2026, Canada’s commercial real estate market is showing stability, confidence, and momentum. Compared to Avison Young’s 2026 annual outlook launched in December 2025, sentiment has shifted from broad optimism to a solidly balanced, steady view.

Progress is not uniform across markets, regions or asset classes, but the shift is clear: many occupiers and investors are moving from broad hesitation to more deliberate decision-making. Rather than waiting for full certainty, they are recognizing the need to act while trade, cost and geopolitical uncertainty continue to influence the market.

That shift is supported by strong local fundamentals and cautious conviction from more than 200 Avison Young experts surveyed, most of whom expect activity to hold steady or improve in the second half of the year. This mid-year outlook broadens the respondent base to include well-rounded expert sentiment from brokerage, project management, valuations and property management groups.

“Across Canada, we’re seeing markets become more actionable and decisive. Economic and geopolitical uncertainty remain, but occupiers and investors are more willing to move forward where fundamentals are strong. The second half of 2026 is shaping up to be less about waiting for certainty and more about executing on opportunity.”

Mark Fieder
Principal, President, Canada

Mark Fieder
What is your overall outlook for real estate market activity in the second half of 2026?
Where do you see your market trending in the second half of 2026?
Vancouver
STABLE
Edmonton
STABLE
Calgary
SLIGHTLY HIGHER
Greater Toronto
STABLE
Ottawa
STABLE
Montreal
SIGNIFICANTLY HIGHER
What is your overall outlook for leasing activity in the second half of 2026?
Office
STABLE
Industrial
SIGNIFICANTLY HIGHER
Retail
STABLE
Multifamily
SLIGHTLY LOWER

Source: Avison Young Professionals
Note: Gauge charts represent the overall sentiment of the Avison Young real estate professionals who were surveyed.

What is your overall outlook for investment activity in the second half of 2026?
Office
STABLE
Industrial
STABLE
Retail
STABLE
Multifamily
STABLE

Source: Avison Young Professionals
Note: Gauge charts represent the overall sentiment of the Avison Young real estate professionals who were surveyed.

Investor interest is strongest in markets with solid demand drivers, limited new supply, and improving capital conditions.

“Looking ahead to the second half of 2026, the outlook for Canadian commercial real estate remains cautiously optimistic. Investment activity continues to strengthen as private and institutional capital gradually returns to the market and demand remains focused on high-quality assets. While renewed trade tensions and global uncertainty may create short-term volatility, improving capital markets conditions and pent-up demand are expected to support increased transaction activity. Despite ongoing challenges, market fundamentals are stabilizing, positioning the sector for stronger leasing activity, renewed investment, and measured growth through the remainder of the year.”

Matthew McWatters, AACI, P.App
Principal, Managing Director & Canadian Leader, Valuation and Advisory Services

Matthew McWatters

Quality remains a clear differentiator. High-quality and value-add opportunities are drawing the most attention, with industrial remaining consistently favoured and office sentiment becoming more constructive. Other asset classes continue to vary by market. Interest rates and financing conditions remain important considerations, with capital focused on resilient income streams, stronger operational performance and opportunities grounded in market realities as Canadian capital returns, selectively.

“In the second half of 2026, success will depend on disciplined execution. While uncertainty remains, owners who focus on operational excellence, strategic investment, and strong tenant relationships will be best positioned to protect value, retain occupiers, and support long-term performance.”

Neil Lacheur
Principal & Executive Vice President, Real Estate Management Services, Canada

Neil Lacheur

Risk, uncertainty and construction cost pressures remain, but improving feasibility, market demand, business confidence and trade conditions are helping move projects from planning to action.

What is your overall outlook for real estate projects and construction for 2026?

Developers will be most focused on...

 

Developers may pause due to...

Mid-Year 2026

Annual 2026

Mid-Year 2025

Development sentiment (see graph) is shifting. For the first time, costs and tariffs dropped to second as the main reasons for potential project delays or pauses – marking substantive declines of 9% since the annual outlook and 11% YOY. In their place, risk concerns became the most prominent at 25%, up from 15%. This suggests developers are adapting to the financial ramifications of economic and geopolitical conditions and are instead more focused on specific risks.

Most project managers surveyed expect activity to hold steady or improve in the second half of 2026, with measured momentum and pockets of growth in industrial, multifamily, and special-purpose projects aligned to business needs and goals.

“We're seeing organizations move beyond simply reducing space and toward optimizing how their workplaces support people, performance and business objectives. As quality inventory tightens and deferred decisions become harder to sustain, we expect more projects to transition from strategy into execution during the second half of the year.”

Arlene Dedier
Principal, Managing Director, Canadian Practice Leader, Workplace & Project Management Services

Arlene Dedier

“While tariffs are indeed a current geopolitical challenge, we anticipate that global trade agreements will be resolved, and, ideally, any construction challenges may be mitigated following these global resolutions. The question on everyone’s mind is how long it will take to resolve these tariff issues.”

Arlene Dedier
Principal, Managing Director & Canadian Leader, Project Management Services

While sentiment in Toronto, Ottawa, Calgary and Edmonton may have balanced since the start of the year, Vancouver and Montréal are showing stronger enthusiasm. Sector-wise, office and industrial were the clear confidence leaders nationally in the annual outlook, whereas at mid-year, sentiment has become more balanced and nuanced depending on markets. Throughout the market summaries below, a consistent story emerges:

Canada’s second half of 2026 is defined by growing confidence, selective opportunity, and a stronger need for timely decisions grounded in local market fundamentals. With investors increasingly prepared to deploy capital, the market has a stronger foundation to build on.

JUMP TO A MARKET
The Vancouver skyline
Image title of Vancouver

Vancouver

Vancouver’s commercial real estate market continues to move at its own pace, one that’s measured, resilient, and quietly active.

While other markets have experienced sharper swings, Vancouver has maintained steady momentum, supported by consistent demand across asset classes and cautious optimism for the second half of 2026.

The focus is on getting decisions right rather than moving quickly, with brokers and clients finding creative ways to structure transactions despite economic and geopolitical uncertainty.

Outlook for H2 2026

That mindset has most market participants surveyed feeling optimistic, with an overwhelming majority expecting performance to hold steady or strengthen through the second half of 2026.

Busy months, busy market

Across sectors, the market is best described as “busy, but not easy.” Leasing and investment pipelines remain active, supported by ongoing pitch activity, returning tenant demand, and a gradual alignment between buyer and seller expectations.

Industrial is leading performance, with larger, well-capitalized occupiers using current conditions to secure space and favourable terms. Office leasing remains stable, supported by larger tenants planning for long-term needs, while smaller users remain more reactive.

“The last few years have pushed businesses to be more deliberate. You might see more people involved in decisions, more deal analysis, and more double and triple checking. But that added rigour is helping build confidence amid uncertainty, while willingness to transact across asset classes remains strong.”

Brett Armstrong
Principal, Managing Director

Constraints in supply persist

Across Vancouver, future supply remains limited. Development pipelines are thin across office, industrial, and retail, with many developers staying on the sidelines. This is beginning to tighten vacancy and put upward pressure on rents, particularly for high-quality space.

The tech sector could also reshape supply if large U.S. technology companies return to Vancouver, increasing the need for high quality space.

For occupiers, this creates a short-term window to secure favourable lease terms, making strategic planning, early renewals, and proactive decisions especially important.

For investors, limited new development and tightening fundamentals are expected to support long-term value, particularly for well-located, high-quality assets. Recent transactions are also setting benchmarks that could support increased activity over time.

Vancouver moves ahead steadily, with quiet momentum

As confidence improves and disciplined capital returns, activity is building across the region. Vancouver remains resilient and realistic, moving carefully while continuing to find positive potential in the months ahead.

MARKET LEADER
MARKET LEADER
JUMP TO A MARKET
The Edmonton Skyline
Image title of Edmonton

Edmonton

Edmonton’s commercial real estate market continues to make steady progress, with improving fundamentals and more diverse demand drivers supporting a balanced outlook for occupiers and investors. Rather than a rapid shift, the market is showing signs of measured, long-term growth and “gentle optimism” across most asset classes.

Edmonton’s industrial base remains central to this resilience, continuing to lead economic performance and serve as a bellwether for broader activity. Demand remains strong, supported by population growth, increased interest in Alberta and momentum across key sectors.

Outlook for H2 2026

Most market participants surveyed expect activity to hold steady or improve modestly through year-end. This points to a market that has adjusted to higher costs and uncertainty and is beginning to find its footing.

Economic growth drivers – for the second half of 2026 and beyond

New demand drivers are reshaping Edmonton’s outlook. Data centre development throughout Alberta is expected to generate construction activity, create jobs and draw labour to the region. National defence investment is also positioning Edmonton to benefit from long-term public sector spending, supporting economic growth and real estate demand.

Energy also remains a critical pillar. Potential pipeline expansion and continued sector strength are expected to drive investment and employment, reinforcing Edmonton’s role in industrial and construction-related activity. Together, energy, defence and digital infrastructure are creating an ecosystem that can sustain momentum beyond 2026 and into 2027.

“Occupiers and business owners feel confident in growing their businesses right now, driving demand for space. At the same time, property owners and investors, despite higher debt and construction costs, see opportunities for modest rent growth. When these factors move together, it lends itself to a market that feels well balanced.”

Cory Wosnack
Principal, Managing Director

Supply is tightening, however, particularly in the suburban office market

For occupiers, the window to secure favourable terms remains open, but it is narrowing. Large blocks of available office space are declining, which could reduce choice and accelerate decision timelines. Rising construction costs, tighter vacancy and potential rent growth will be key considerations as tenants plan their next moves.

Outside investors are taking notice of Edmonton’s potential

Investors are recalibrating, with more interest coming from outside the region, including institutional capital. This signals growing confidence in Edmonton’s trajectory and could increase competition for assets, while still leaving room for value-oriented strategies where vacancy remains elevated.

Political and global uncertainty continue to influence sentiment, but local fundamentals appear to be playing a larger role in decision-making. In many cases, tenants and owners are moving forward despite external noise, recognising that delays can carry their own costs.

Edmonton is moving from stabilisation toward sustained growth

The pace of change is measured, but the direction is clear. Demand is strengthening, supply is tightening and pricing is beginning to respond. Risks remain but are broadly manageable, suggesting Edmonton’s gains should not only continue, but could become even more visible in the months ahead.

MARKET LEADER
  • Profile Image for Cory Wosnack

    Cory Wosnack

    Principal, Managing Director

    Edmonton

    Corporate Executive, Sales & Leasing, Office

    Contact
JUMP TO A MARKET
A skyline of Calgary
Image title of Calgary

Calgary

The second half of 2026 is shaping up positively for Calgary, with confidence building as the city’s economic fundamentals and demand across major asset classes remain strong.

A key contributor to Calgary’s momentum is the strength of its local market fundamentals, rather than reliance on any single policy outcome or geopolitical factor.

Industrial remains the market’s strongest-performing asset class, supported by Calgary’s expanding role as a logistics and supply-chain hub.

Outlook for H2 2026

The city’s affordability, quality of life, and diverse economic opportunities continue to attract businesses and residents, reinforcing long-term demand across multiple property types.

Together, these factors point to steady, resilient performance through the remainder of the year.

Momentum expected across key sectors

Strong demand for industrial product, paired with limited availability, is expected to support leasing and investment activity through the remainder of 2026.

The office sector is also showing encouraging signs. While growth remains measured, occupiers continue to prioritize high-quality space and return-to-office strategies. Availability of premium office space, particularly large blocks in top-tier buildings, is becoming increasingly limited while energy sector activity and mergers and acquisitions are also influencing demand.

Retail fundamentals remain healthy, supported by steady consumer demand and limited new development. Many market participants continue to view retail as one of the most attractive investment sectors for the second half of the year.

Multifamily remains fundamentally strong, even as significant new rental housing delivery contributes to rising vacancies in some areas and modest downward pressure on rents.

Overall, population growth and Calgary’s relative affordability continue to support long-term confidence in the market.

“The outlook for Calgary remains constructive and optimistic. Demand is supported by a diverse set of industries, capital remains active and occupiers are competing for the highest quality space. While cost pressures and broader economic uncertainty remain important considerations, the city’s strong fundamentals continue to create opportunities across multiple asset classes, with returning confidence translating into tangible market activity.”

Brennan Yadlowski
Principal, Managing Director

Tightening supply will shape decisions for occupiers and investors

For occupiers, tightening availability of quality space, rising occupancy costs, and growing competition for the best locations will be key themes to watch in the months ahead. Constrained supply across office and industrial markets suggests organizations should plan early for renewals, relocations or expansions.

For investors, limited supply, strong tenant demand, and potential rental growth will remain central considerations. Continued confidence and capital deployment are anticipated, particularly across industrial, retail, and office asset classes.

Calgary’s market outlook remains balanced and optimistic

While interest rates, inflation, construction costs, broader geopolitical uncertainty, and the potential effects of tariffs remain key factors to watch, Calgary’s market has proven resilient through the first half of 2026. That resilience is expected to continue in the months ahead as the city’s strong fundamentals, improving confidence, and widespread demand position it well for the remainder of 2026.

MARKET LEADER
JUMP TO A MARKET
Image title of Toronto

Downtown Toronto

Downtown Toronto’s commercial real estate market is showing signs of recovery. While uncertainty remains, improving fundamentals are building confidence among occupiers and investors, who are adapting to volatility as part of the current landscape.

Leasing activity continues to trend positively, supported by steady demand across office and industrial assets, strong demand from financial institutions, and market dynamics shaped by technology and geopolitical factors.

Outlook for H2 2026

New supply remains limited, particularly in the office market, where little product is expected to come online in the near term. As a result, vacancy is tightening slowly, but consistently, as the market moves toward balance.

Activity is expected to increase or hold steady through the second half of 2026 as the market adjusts. This outlook aligns with Avison Young broker sentiment, with most respondents expecting activity to match or exceed the first half of the year.

A clear flight to quality continues

Tenants continue to favour well-located, amenity-rich buildings, especially in Toronto’s core, widening the gap between prime and secondary assets.

This trend is also driving a spillover effect into adjacent and suburban markets.

Retail re-emerging as a standout performer

Leasing demand is strong across formats, from strip retail to grocery-anchored centres, and is increasingly translating into investor appetite. This momentum reflects stabilizing consumer activity and reinforces retail’s resilience in the current cycle.

Several factors will shape the pace of recovery

For occupiers, timing will be critical. Many still hold negotiating leverage in certain segments, but conditions are expected to tighten as vacancy declines and landlord incentives narrow. Limited new development, particularly in transit-connected core locations, is likely to put pressure on availability and pricing over time. Acting early, especially for high-quality space, may prove advantageous.

Investors, meanwhile, are beginning to re-engage. Investment transactions have surged recently, reflecting one of the strongest periods in the market in recent memory, driven by greater confidence and a view that values have stabilized. Many see opportunity in both core assets and value-add plays as sidelined capital starts to deploy.

“Trade policy, geopolitical risk and interest rate movements remain important watchpoints, even if their immediate impact has softened. At the same time, structural shifts such as artificial intelligence and its implications for space demand and infrastructure are beginning to shape the market’s future. It is encouraging to see this level of investment activity. Demand for high-quality office assets has not been this strong in some time, underscoring Toronto’s compelling investment opportunities and long-term potential.”

Joe Almeida
Principal, Managing Director

Toronto is a market no longer waiting for clarity

Toronto is moving forward, supported by improving fundamentals, returning capital and a renewed willingness to make decisions. Recovery is expected to remain gradual, driven increasingly by market fundamentals, normal business activity and consumer behaviour rather than external support. Together, these signals point to continued momentum through year end.

MARKET LEADER
  • Profile Image for Joe Almeida

    Joe Almeida

    Principal, Managing Director Ontario, Broker of Record, Avison Young Commercial Real Estate Services, LP, Brokerage

    Ottawa, Toronto, Toronto North, Toronto West, Southwestern Ontario

    Corporate Executive

    Contact

GTA Suburban and Southwestern Ontario

Across Suburban Toronto and Southwestern Ontario, the market is moving beyond peak uncertainty as more occupiers and investors act despite imperfect conditions, supported by clearer outlooks and business necessity.

It marks a shift from waiting to acting, as groups recognize they cannot remain on the sidelines indefinitely.

The first half of 2026 showed uneven demand, with inquiries and deal activity increasing in the second quarter. Looking ahead, the second half is expected to bring steadier, more proactive, and disciplined decision making.

Outlook for H2 2026

Demand in the second half is expected to be driven by return-to-office and workplace strategies, flight to quality, and growth in logistics, e-commerce, defence, and aerospace. Occupiers are also focused on optimizing footprints and improving efficiency.

These factors help explain why 60% of Avison Young brokers surveyed expect activity to remain stable across the region through year end, while 40% expect conditions to improve.

Growth won’t come without risks and challenges

As market conditions continue to evolve, businesses and investors must navigate a growing mix of uncertainty and opportunity. Limited new supply in certain segments, a shrinking development pipeline, and increased competition for capital may continue to influence availability and pricing, while emerging trade and economic pressures could affect business confidence and decision-making. Demand remains present, but it has become more deliberate as occupiers and investors place greater emphasis on flexibility, risk management, and long-term strategy.

“The window of opportunity we've had over the last couple of years is beginning to narrow in certain segments. At the same time, heightened trade and economic uncertainty is causing many organizations to reassess their timelines and capital commitments. The most successful occupiers and investors will be those that evaluate options early and act when opportunities align with their business objectives.”

Sanjiv Chadha, MCR, SIOR
Principal, Managing Director

Suburban Toronto and Southwestern Ontario’s market is cautiously confident

The second half of 2026 is expected to bring a mix of opportunity and uncertainty across the region. While market confidence has improved from recent lows, occupiers and investors continue to navigate evolving economic conditions, shifting capital markets, and heightened trade-related uncertainty.
 
Demand remains steady and increasingly deliberate, with activity concentrated around high-quality assets, well-located opportunities, and clear business objectives. Investment activity is showing early signs of stabilization following an extended slowdown, supported by improving sentiment and greater alignment between buyer and seller expectations.
 
Opportunities continue to emerge across asset classes, particularly where pricing has adjusted or strategic repositioning can create value. At the same time, investors and occupiers should remain focused on fundamentals, cost structures, operational flexibility, and long-term performance.
 
For both occupiers and investors, success will depend on evaluating options early, maintaining flexibility, and making disciplined decisions as market conditions continue to evolve.

MARKET LEADER
JUMP TO A MARKET
A skyline of Ottawa
Image title of Ottawa

Ottawa

Across Ottawa, the commercial real estate market has shifted, entering the second half of 2026 with measured optimism.

Hesitation is giving way to cautious momentum, supported by improving fundamentals and greater clarity for occupiers and investors.

The first half of the year brought a noticeable increase in buyer and investor engagement compared with 2025. That momentum is expected to continue through the rest of 2026, so long as broader economic conditions remain relatively stable.

Outlook for H2 2026

Contributing to this more positive outlook? Improved confidence, greater clarity around trade and economic policy, and stronger market certainty.

Among Avison Young brokers surveyed, 56% anticipate activity will remain the same across the region through year end, while 44% expect conditions to improve.

Performance continues to vary significantly across Ottawa’s asset classes

While strong overall, recovery has not been uniform across asset types, quality levels or locations. A clear divide has emerged between high-quality, well-located properties and those requiring functional updates or physical repairs. Investors are becoming more selective, and lenders are applying greater scrutiny, particularly in the office sector. As some lower-quality inventory is removed from the leasing pool for conversion or repositioning, the value of quality space is being reinforced.

Beyond office, industrial demand remains resilient. Limited new development is underway, supported by large users and potential growth linked to major defence industry tenants and small-bay product.

Retail, particularly grocery-anchored formats, and multifamily assets continue to attract strong investor interest, reflecting a broader shift toward stable, income-generating sectors. Increased residential conversions and multifamily development downtown are also strengthening Ottawa’s live-work-play environment, contributing to a more vibrant core with growing pedestrian and vehicle traffic.

For occupiers, the second half of 2026 will require agility

With decision-making timelines extended and competition tight for the right high-quality space, shifting market dynamics are influencing space and location decisions across Ottawa and a strategic approach has never been more important.

“Uncertainty has become part of the environment. The difference now is that the market knows how to respond. There are always options, some just might take a bit of extra creativity to uncover.”

Jordan Lovett
Principal, Managing Director

Ottawa’s market shows steady recovery

The market is adapting to an environment shaped by greater selectivity, evolving tenant needs and ongoing economic pressures. 

Through it all, Ottawa is gaining its footing, with activity expected to continue improving gradually in the months ahead. 

MARKET LEADER
JUMP TO A MARKET
A skyline image of Montreal
Image title of Montreal

Montreal

Montreal’s commercial real estate market is anticipating steady growth through the second half of the year, supported by a stronger-than-expected first half and resilient economic fundamentals.

Transaction volumes and leasing activity have outperformed 2025 levels, with momentum continuing despite lingering global and geopolitical uncertainty. Decision-making is also becoming less stalled, as occupiers and investors show a growing ability to move forward.

Outlook for H2 2026

Activity is expected to increase or remain stable across the region, with roughly 60% of Avison Young brokers surveyed anticipating activity to increase.

Flight to quality remains

Flight to quality continues to shape the market, with demand concentrated in well-located, high-quality office and industrial assets, driven in part by return-to-office momentum and evolving workplace expectations.

At the same time, lower-tier assets are not necessarily being left behind, finding buyers in opportunistic investors willing to reposition or upgrade properties to meet modern standards.

Occupiers should be aware of evolving rent curves, incentives and impacts, and strategize early to secure best-fit space to meet their needs.  

Construction costs continue to challenge

Elevated construction and fit-out costs remain challenging for occupiers and owners, requiring disciplined planning, creative asset positioning and careful cost management. 

This reinforces the need to move strategically when the right opportunities arise, particularly as high-quality options become harder to secure, and to leverage key partnerships and project management support where possible to help mitigate risks. 

“Follow as thorough a process as you can right now. Use the market to leverage, be efficient, fast and creative, and where possible get support to try and manage and maintain costs.”

Patrick Laurin
Principal, Managing Director & Leader of Occupier Services

Industrial and office sectors remain strong

Industrial remains a key beneficiary of improving trade clarity and pent-up demand. As businesses gain visibility into cross-border conditions and production strategies, they are resuming expansion plans, supporting leasing and investment activity. Office leasing is also gaining traction, particularly for top-tier space, where availability is tightening and competition is increasing.

Montreal’s market is poised for sustained momentum

Although market uncertainty remains, many organizations have become better equipped to operate in a dynamic environment. That said, current trends and market sentiment could change should policy decisions enacted by various administrations materially affect the economy, leading companies to revisit their strategic priorities, expansion plans, and real estate requirements. 

Through it all, however, Montreal continues to prove its resilience, supported by stable employment (the lowest unemployment rate in Canada) and steady demand drivers. The result? A market that remains cautious, but active.
 

MARKET LEADER
  • Profile Image for Patrick Laurin

    Patrick Laurin

    Principal and President, Québec, Leader of Occupier services, Real Estate Broker Certified AEO

    Montreal

    Corporate Executive

    Contact
MARKET LEADER
JUMP TO A MARKET

Conclusion

Similar to initial 2026 projections, expectations for the second half of the year again point to several clear themes: renewed yet balanced confidence, improving capital conditions, continued flight to quality, gradual office recovery and regional strength that is reshaping local market fundamentals.

While Avison Young’s annual outlook focused on a steady path building toward recovery, the mid-year view is more action-oriented: Canadian markets and sectors are ready to accelerate pace.

For office, top demand drivers are return-to-office mandates and flight to quality. For industrial, sector-driven demand is meeting supply chain reconfiguration and flight to quality. For retail, it is steady consumer spending and strong retailer performance. For multifamily, new household formation, housing demand, and strong employment levels are key drivers. All are bolstered by growth in sectors like defence, finance, tech, and AI.

Even as caution remains, recovery is taking shape. Success will increasingly depend on timely, informed decisions in markets that are optimistic, selective and driven by high-quality assets. As quality space becomes harder to secure and development pipelines narrow, occupiers may discover immediate action is required – or should have happened sooner.

For the remainder of 2026, the question is no longer whether opportunities exist. They do. It is a matter of knowing where to find them and being prepared to act.

JUMP TO A MARKET
Disclaimer:
Survey findings are based on responses from 220 Avison Young Canada experts surveyed between June 3 and 16, 2026. Responses reflect the assumption that the Canada–United States–Mexico Agreement (CUSMA) will ultimately be renewed with only limited, targeted changes, preserving the core framework of duty-free trade across North America. 

Questions? Let's chat.

: 0 / 280

: 0 / 280

: 0 / 280

: 0 / 280

: 0 / 280

: 0 / 65000

: 0 / 280

: 0 / 65000

: 0 / 280

Footer JS and CSS Helper is present