National vacancy rates decline for both office and industrial real estate for first time since 2020

Colliers Q1 2026 report shows office vacancy rate declined by 100 basis points year-over-year

TORONTO, April 10, 2026 /CNW/ - Canada's commercial real estate markets are entering a clear phase of recalibration and sustained growth in early 2026, with office and industrial fundamentals improving across the country.

According to Colliers' Q1 2026 National Market Snapshot, the narrative has shifted from pandemic-era uncertainty to a "new baseline." The market is moving towards sustained growth in the office sector, stabilization in industrial and steady, varied performance in retail.

Office market: from "flight to quality" to "fight for quality"

National office vacancy saw a meaningful contraction, declining 100 basis points year-over-year to 13.6%, marking one of the most significant improvements since the onset of COVID. This marks a pivotal right sizing as the market absorbs existing inventory amidst a near-total halt in new office construction.

Leasing activity continues to strengthen in Downtown Class A buildings, underscoring tenant preference for high-quality, well-located space. Return-to-office mandates are having a measurable national impact, helping drive absorption and stabilize demand. With less than 2.0 million square feet of office space under construction nationwide, limited new supply is expected to support further tightening as leasing activity focuses on existing inventory.

At the same time, competition for premium office space is intensifying as the market moves from a "flight to quality" to a "fight for quality." Major tenants are increasingly opting to renew early to secure top-tier space, while incentives and turnkey offerings are becoming more limited in best-in-class buildings. Notably, Edmonton's office market reached a milestone with anchor tenant ATCO's relocation to the former Canadian Western Bank Tower at 10035 105 St., marking the city's largest office transaction in ten years. This dynamic is widening the performance gap between high-quality assets and older, less competitive inventory across Canada's major markets.

"The decline in vacancy we're seeing isn't a statistical blip; it's the result of a structural rightsizing," said Adam Jacobs, Head of Research I Canada. "With conversions removing record amounts of obsolete stock and a near-total halt in new builds, the window to secure top-tier space is closing, and we expect this scarcity to drive significant competition through the remainder of 2026."

Industrial markets at an inflection point

Canada's industrial market reached an important inflection point, recording its first national decline in vacancy since 2022. Absorption totalled 3.6 million square feet in Q1, outpacing 3.0 million square feet of new supply, with five of six major markets recording quarter-over-quarter vacancy declines. The shift signals a renewed balance after several years of tight conditions and heightened speculative development.

Construction starts remained resilient in the first quarter of 2026, with 5.6 million square feet of new projects breaking ground. This activity was heavily concentrated in Canada's primary hubs as Toronto, Vancouver, and Calgary collectively drove 76% of all new starts.

"We are seeing a notable shift in developer confidence; the recent dominance of design-build projects has pivoted back toward speculative construction," continued Jacobs. "With the total national pipeline now sitting at 24.5 million square feet, the market continues to maintain a healthy and consistent level of active development."

For further insight into the trends shaping Canada's commercial real estate markets, access the full Q1 2026 National Market Snapshot at collierscanada.com/research. 

About Colliers

Colliers is a global diversified professional services and investment management company operating through three industry-leading businesses: Commercial Real Estate, Engineering, and Investment Management. With greater than a 30-year track record of consistent growth and strong recurring cash flows, we scale complementary, high-value businesses that provide essential services across the full asset lifecycle. Our unique partnership philosophy empowers exceptional leaders, preserves our entrepreneurial culture, and ensures meaningful inside ownership -- driving strong alignment and sustained value creation for our shareholders. With $5.6 billion in annual revenues, 24,000 professionals, and $108 billion in assets under management, Colliers is committed to accelerating the success of our clients, investors, and people worldwide. Learn more at corporate.colliers.com.

SOURCE Colliers International Group Inc.

Contacts: Pamela L. Smith, Senior Director, Corporate Communications l Canada, Colliers, 604-787-8872 / [email protected]; Nikita Shivdasani, Senior Account Manager spPR Inc., 647.581.8317 / [email protected]