Canadian Commercial Real Estate Markets Reset as Disciplined Capital Targets Quality and Income-Producing Assets Amid Geopolitical Tensions, says REMAX Canada

Prairie provinces and Atlantic Canada remain frontrunners in Canadian commercial real estate

TORONTO, May 12, 2026 /CNW/ -- Interest rate stability has drawn investors back to Canada's commercial real estate markets, with capital increasingly targeting strong cash-flow assets as leasing activity strengthens and fundamentals firm up, despite ongoing economic uncertainty, according to a report released today by REMAX Canada.

REMAX Canada's 2026 Commercial Real Estate Report examined first-quarter activity across 12 major Canadian markets and found that the commercial property market has continued to evolve with improved absorption, particularly in the office sector, where return-to-office mandates are supporting increased leasing activity in premium space. Industrial demand has remained durable nationwide, with inventory challenges persisting. Retail fundamentals have continued to outperform expectations, supported by population growth and infrastructure investment, reinforcing long-term demand. While capital deployment has been measured in most markets analyzed, improving financial conditions have prompted renewed interest in well-located, income-producing assets.

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"While uncertainty shaped much of 2025, we're now seeing a clear shift in investor behaviour," says Damon Conrad, Vice President, REMAX Canada Commercial. "Capital remains cautious and focused on preservation, but as financial conditions stabilize, deferred demand is beginning to re-emerge. Investors are highly selective, but they are increasingly prepared to act where income stability and long-term value are evident."

Following an extended period of price discovery, early signs of cap rate compression have materialized in select segments as borrowing costs have stabilized and income streams remained resilient. Given the narrowing bid-ask spread and more disciplined underwriting, investors have been increasingly able to make deals come together.

Key trends shaping Canada's commercial real estate market

• Selective capital re-entry: Investors have targeted stabilized, income-producing assets in markets such as the Greater Toronto Area (GTA), Vancouver and Edmonton, where improving conditions have started to draw sidelined capital back into the market.
• Office market divergence: Demand has strengthened for triple-A, amenity-rich space in Toronto, Vancouver and Ottawa, while older downtown inventory in Calgary, Winnipeg and London have faced mounting pressure to reposition or convert.
• Retail outperformed expectations: Grocery-anchored and service-oriented retail have continued to lead in markets such as Calgary, Regina, London, Hamilton-Niagara and Halifax, with tight vacancy and strong investor demand driving competition. In some markets, landlords have held out for top dollar, further constricting available inventory. Neighbourhood retail also continued to perform well, supported by limited availability and sustained demand across most shopping nodes.
• Industrial recalibrates: In supply-constrained markets and popular industrial parks in Regina, Winnipeg, Ottawa and Halifax, repurposing existing inventory has become exceptionally popular. Vancouver and Hamilton-Niagara are still working through new inventory, creating more balanced market conditions favouring both owner-occupiers and investors.
• Multi-family adjusts to new supply: Vacancy has risen in markets such as Vancouver, Calgary and Halifax following a surge in completions, while demand for existing rental stock has remained strong in Regina, Winnipeg and Saskatoon. In response to the glut in Toronto, High Art Capital, in conjunction with a board-governed Crown agency, Building Ontario Fund (BOF), is launching a $1.3-billion fund set to acquire and convert some of Toronto's unsold inventory. Once completed, the move may substantially reduce vacancy rates in the GTA and if successful, similar programs could emerge in markets such as Vancouver.
• Development becomes increasingly selective: Activity has slowed in markets such as Vancouver and the Greater Toronto Area, where condominium development has stalled, while demand for industrial and infrastructure-related land has continued to gain traction in Calgary and London.

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"Investors are no longer approaching the market broadly," says Conrad. "Capital is being deployed with far greater precision, targeting assets with clear income profiles and long-term resilience. Quality, location and tenant stability are driving decision making with less emphasis on speculation and greater focus on durable cash flow."

Amenity-rich office space sought after, while older assets face challenges

Office markets have continued to separate along clear lines, with demand concentrated in well-located, amenity-rich buildings in downtown cores. A-class product has continued to attract the greatest demand, while older assets have faced persistent leasing challenges across both urban and suburban markets.

Return-to-office mandates have helped to drive up absorption in key markets, while elevated vacancies have persisted in parts of Calgary, Winnipeg and London. Conversions to residential use have helped to reduce supply in select cities, gradually improving overall balance. Both London and Calgary have conversion programs in place to incentivize developers, but many have refocused their efforts on other asset classes in the interim.

Suburban markets have continued to buck the trend, with strong absorption levels reported in major markets across the country. Tenants have prioritized costs, accessibility, labour and safety in markets including Calgary, Edmonton, Hamilton, the GTA and Ottawa.

Low vacancies and strong investor demand buoy retail

Retail has remained one of the most stable and competitive asset classes, with strong demand for necessity-based and service-oriented space. Grocery-anchored centres and neighbourhood retail in markets such as Calgary, Regina, London, Hamilton and Halifax have continued to report low vacancy, while limited supply and owner hold strategies have intensified competition for available product.

Distinct neighbourhood retail nodes that blend boutiques, restaurants and service-oriented shops have gained momentum across markets such as the GTA, Calgary and Ottawa, driven by demand for community-focused destinations. These high-street environments have outperformed more generic retail formats, with curated tenant mixes and walkable appeal supporting strong foot traffic, tenant retention and stable rents.

Concerted efforts are underway in several markets to revitalize and reimagine struggling downtown retail space. In Winnipeg, for instance, a recent pilot program to bolster foot traffic in the summer saw empty storefronts, surface parking lots, and underutilized street space transition into vibrant hubs with street furniture, art installations, picnic tables, benches and lighting features.

Strong population growth expected to underpin future multi-unit residential construction

The multi-family sector has continued to benefit from sustained population growth and long-term rental demand, although near-term conditions have varied. Increased supply has introduced more balanced conditions in some markets, while financing constraints and elevated construction costs have slowed new development, particularly in the condominium sector, reinforcing the shift toward purpose-built rental.

Statistics Canada's Population Projections for Canada (2025-2075), released in January 2026, estimated the Canadian population, sitting at approximately 41.7 million in 2025, would continue to increase over the next decades to between 44.0 million (low-growth scenario) and 75.8 million (high-growth scenario) by 2075.

Development activity has slowed across several major markets, with higher borrowing costs and construction challenges weighing on feasibility. However, recent announcements to ease development costs--most notably Toronto's multi-level agreement to cut development charges by up to 50 per cent, alongside earlier freezes, deferrals and exemptions--have begun to reset the economics of new construction in Canada's most expensive markets. In Vancouver, increased density and more flexible planning frameworks have had a similar effect. By lowering upfront costs and improving cash flow timing, previously stalled projects may once again be brought back to life. While construction and financing pressures persist, these shifts mark a quiet but important turning point, moving both markets from gridlock toward gradual reactivation.

Industrial, logistics and data infrastructure

Industrial real estate remains the workhorse across the country's commercial market, with some regions facing supply constraints, while others continue to work through new deliveries. Demand for small-bay and flexible industrial space has remained particularly strong, with owner-occupiers and investors actively pursuing well-located product. Inventory has been tightest in Edmonton, Saskatoon, Regina, Winnipeg, London and Ottawa. Greater Vancouver and Hamilton-Niagara (South Greater Golden Horseshoe) have been working through oversupply, but even there, market sentiment has been cautious but stable. Vancouver has experienced absorption that could materially shift market leverage by mid-2026 while Halifax had new supply pressuring availability, even as demand has remained solid in key industrial parks.

Amid industrial inventory shortages, an uptick in demand for recreational space has also impacted the Canadian commercial real estate market, with the popularity of pickleball, padel, cricket, rock climbing and other such activities on the rise. Churches have also shown growing interest in industrial product in several markets where zoning permits, with the steel-frame and concrete-flooring warehouse structure most conducive to retrofitting.

While condominium projects have stalled in Vancouver and the GTA, demand for development land has shifted toward industrial, logistics and infrastructure-related uses. Increasingly, developers have been prioritizing projects with clear execution paths and have focused on repositioning existing assets to unlock value. Markets such as Calgary have continued to benefit from investment tied to logistics and data infrastructure, while Hamilton-Niagara has begun to see early momentum linked to AI-driven development. In Halifax, large-scale government and infrastructure investment has reinforced long-term demand, while in Vancouver, limited new supply is expected to place renewed pressure on the market in the future.

"Investors are only prepared to sit on the sidelines for so long," says Conrad. "As financing conditions ease and pricing expectations align, capital is re-entering the market with greater conviction. Transaction activity is beginning to build, and while recovery remains uneven, momentum is clearly shifting toward a more active and disciplined investment environment."

About the REMAX Network 
As one of the leading global real estate franchisors, REMAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 145,000 agents in over 8,500 offices and a presence in more than 120 countries and territories. REMAX Canada refers to REMAX Canada, Inc., which is an affiliate of REMAX, LLC. Nobody in the world sells more real estate than REMAX, as measured by residential transaction sides.

REMAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. REMAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children's Miracle Network® and other charities. To learn more about REMAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from REMAX Canada, please visit blog.remax.ca.

Forward looking statements

This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company's business, the Company's ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company's ability to attract and retain quality franchisees, (6) the Company's franchisees' ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company's ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company's ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission ("SEC") and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company's website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances. 

SOURCE REMAX Canada

Alexandra Ricciardella, [email protected], 647-407-3600; Terri Baumann, [email protected], Lydia McNutt, [email protected]