Colliers Canada's Q2 2026 data shows office and industrial vacancy falling for multiple quarters
Canada's commercial real estate sector is registering its most sustained period of improvement since before the pandemic, with office and industrial vacancy rates falling simultaneously for several consecutive quarters, according to Colliers Canada's Q2 2026 National Market Snapshot.
The national office vacancy rate declined for the fourth consecutive quarter, edging down to 13.4% in Q2 2026 from 13.6% in Q1, driven by a 609,912-square-foot gain in national net absorption.
At the same time, industrial vacancy tightened for the second straight quarter, settling at 3.3% nationally, a level that reflects robust occupier demand and a slowing development pipeline.
Flight to quality reshapes the office landscape
The recovery in Canada's office sector is not uniform. Colliers Canada's data shows that gains are concentrated in premium, amenity-rich space in downtown cores, where tenants are consolidating and upgrading their footprints.
In Toronto, the downtown vacancy rate fell below 10% for the first time in years in Q2, while the Financial Core's top-tier gross rents crossed the $100-per-square-foot threshold.
In Vancouver, positive absorption in the Broadway Corridor and suburban markets more than offset a 156,000-square-foot sublease return in the downtown core.
Ottawa, by contrast, recorded 205,018 square feet of negative net absorption, partly reflecting public-sector space reductions, though the federal government's four-day return-to-office mandate, set to take effect in July, is expected to generate fresh leasing demand in the capital.
CBRE reported a fourth consecutive quarter of positive office absorption, led by Toronto, Calgary, and Montreal, as tightening premium office supply begins boosting demand across other asset classes.https://t.co/UZgoyunkVa
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 7, 2026
Adam Jacobs, head of research at Colliers Canada, said the data challenges earlier assumptions about remote work eliminating the need for physical office space, with companies increasingly recognising that office hubs are essential for collaboration.
That view aligns with what commercial mortgage professionals have been hearing from their clients. Damon Conrad, vice president of REMAX Canada Commercial, told Canadian Mortgage Professional earlier this year that "the strongest office environments today are those that offer quality space, accessibility, and amenities," and that older assets face mounting pressure to reposition or restructure.
That bifurcation matters for brokers and commercial lenders underwriting office assets. As premium office fundamentals strengthen across the country's major markets, older Class B and C buildings face a different trajectory, one that demands closer scrutiny on loan-to-value ratios and tenancy profiles.
Industrial market tightens as new supply slows
On the industrial side, the picture is broadly constructive. Colliers Canada's Q2 2026 data shows positive net absorption in all but one market nationally, and average net rents held near $14.72 per square foot, declining just three cents quarter-over-quarter, which Colliers described as a possible indicator that asking rates may be approaching their floor.
Calgary's industrial market recorded the strongest quarterly performance, with net absorption exceeding 1.5 million square feet in the Greater Calgary Area, reducing vacancy to 3.0%, its lowest level since the e-commerce-driven surge of 2022.
Edmonton's industrial rents recovered to $11.86 per square foot after a brief period of softening, while Saskatoon's industrial vacancy tightened further to 2.5%, with rental rates rising 3.6% quarter-over-quarter.
Victoria posted the highest industrial net asking rents in Canada at $20.79 per square foot, approximately $2 above any other market nationally.
New office construction has fallen to a 15-year low, with only 37,500 square feet of new supply delivered nationally in Q2 2026, and no new projects added to the construction pipeline during the quarter.
Mark Fieder, president of Avison Young Canada, had told CMP that by mid-2026 the country was likely to see a return to rising industrial rents, a forecast that Colliers' Q2 data appears to support.
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