Avison Young survey shows experts expect activity to hold or grow for the rest of 2026
Canadian commercial real estate has moved decisively past the paralysis that defined the past two years.
Avison Young's 2026 Canadian Mid-Year Outlook, based on a survey of more than 200 of the firm's Canadian professionals completed in June 2026, found that 96% of respondents expect activity to either increase (49%) or hold steady (47%) through the remainder of the year, a 4% year-over-year improvement over the same measure at mid-year 2025.
Each of Canada's major markets is gaining traction through its own combination of demand drivers, supply constraints, and investor behaviour — and the differences matter for how brokers frame financing conversations with clients.
"The second half of 2026 is shaping up to be less about waiting for certainty and more about executing on opportunity," said Mark Fieder, Principal and President, Avison Young Canada.
Where quality wins and supply narrows
Toronto's downtown commercial market is producing some of the most notable numbers in the national survey. Benchmark Class A cap rates in the core held at 6.00% in Q2 2026, per Avison Young data, while the high-density urban multifamily cap rate of 3.90% is the tightest of any major market surveyed.
A fourth consecutive quarter of positive office absorption — led by Toronto, Calgary, and Montréal, according to CBRE — reflects tightening premium office supply that is beginning to push demand across other asset classes.
Investment transactions have surged, representing one of the strongest periods the market has seen in recent memory.
"Demand for high-quality office assets has not been this strong in some time," said Joe Almeida, Principal and Managing Director, Avison Young Toronto, who noted that artificial intelligence and its implications for space demand are beginning to shape the market's longer-term trajectory.
Vancouver is registering some of the sharpest enthusiasm in the national survey. The market is best described, according to the firm's regional professionals, as "busy, but not easy."
Industrial is leading performance, with large, well-capitalised occupiers using current conditions to lock in space and terms. Positive absorption in the Broadway Corridor and suburban markets more than offset a sublease return in the downtown core.
The larger risk is on the supply side: development pipelines across office, industrial, and retail remain thin, with vacancy tightening and rents beginning to respond. A potential return of major US technology firms to Vancouver could further reshape high-quality space demand.
"That added rigour is helping build confidence amid uncertainty," said Brett Armstrong, Principal and Managing Director, Avison Young Vancouver, describing how clients are approaching transactions with greater deliberateness, a dynamic that is producing better-structured deals rather than fewer of them.
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
Calgary's momentum is broad-based and grounded in local fundamentals rather than any single policy outcome, which Avison Young's regional professionals say makes it more resilient.
Industrial is the strongest-performing asset class, supported by the city's expanding role as a logistics and supply-chain hub. Premium office supply is tightening as energy sector activity and mergers and acquisitions drive demand for top-tier space.
Retail is drawing consistent investor interest, while multifamily remains fundamentally strong despite some upward pressure on vacancy from new supply in certain submarkets.
"The city's strong fundamentals continue to create opportunities across multiple asset classes," said Brennan Yadlowski, Principal and Managing Director, Avison Young Calgary.
Montreal is among the most buoyant markets in the survey, with roughly 60% of Avison Young brokers expecting activity to increase through year-end — the highest concentration of growth expectations of any major market covered.
Transaction volumes and leasing activity are outperforming 2025 levels, industrial is benefiting from improving trade clarity as businesses resume cross-border expansion plans, and office demand is strengthening for top-tier space.
Montréal recorded the highest commercial vacancy rate among Canada's major markets in 2025 at 5.2%, but that figure is now working in the market's favour, giving investors an entry point that other cities can no longer offer. Construction costs remain a meaningful constraint.
"Follow as thorough a process as you can right now," said Patrick Laurin, Principal, Managing Director and Leader of Occupier Services, Avison Young Montréal.
The city's distinction as carrying the lowest unemployment rate in Canada provides a structural demand floor few other markets can match.
Edmonton and Ottawa: steady gains, shifting supply
Edmonton's commercial market is advancing at a measured pace, characterised by what Avison Young's regional professionals describe as "gentle optimism" across most asset classes.
Industrial continues to lead, but the market's growth story is increasingly diversified.
Data centre development throughout Alberta is expected to generate construction activity and draw labour to the region.
National defence investment is positioning Edmonton as a longer-term beneficiary of public sector spending. Energy — including potential pipeline expansion — remains a critical pillar reinforcing industrial and construction demand well into 2027.
"Occupiers and business owners feel confident in growing their businesses right now," said Cory Wosnack, Principal and Managing Director, Avison Young Edmonton, adding that owner and investor confidence is translating into what he describes as a well-balanced market.
Institutional investors from outside the region are beginning to notice, which could increase competition for assets in a market where some elevated vacancy still leaves room for value-oriented strategies.
Ottawa presents a more nuanced picture. The capital recorded negative net absorption of 205,018 square feet in recent quarters, partly reflecting public-sector space reductions.
The federal government's four-day return-to-office mandate is, however, expected to generate fresh leasing demand.
Among Avison Young's Ottawa brokers, 56% anticipate activity will hold steady through year-end, while 44% expect improvement.
A clear quality divide has emerged: lenders are applying greater scrutiny to secondary office inventory, while grocery-anchored retail, defence-linked industrial, and multifamily assets in the downtown core are attracting consistent capital.
"Uncertainty has become part of the environment," said Jordan Lovett, Principal and Managing Director, Avison Young Ottawa.
"The difference now is that the market knows how to respond."
Development hesitation shifts from cost to risk
Across all six markets, a notable structural shift is emerging in how developers are explaining caution on new projects.
For the first time in Avison Young's bi-annual survey cycle, costs and tariffs have dropped to second place as the primary reason for potential delays, declining 9% since the annual outlook and 11% year-over-year.
Risk concerns have replaced them at the top, cited by 25% of respondents in 2026, up from 15% a year earlier.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
