Office Vacancy Declines for Fourth Straight Quarter
Colliers Canada released its Q2 2026 National Market Snapshot on July 8, 2026, revealing strengthening fundamentals across the country's commercial real estate market. National office vacancy declined to 13.4%, marking its fourth consecutive quarterly decrease. Industrial vacancy fell to 3.3%, representing a second quarter of tightening market conditions. The results point to a steady and measured recovery driven by occupier demand, improving absorption levels, and an increasingly constrained development pipeline.
National office net absorption reached 609,912 square feet during the quarter, while industrial net absorption exceeded 7.1 million square feet, demonstrating continued business confidence across major markets. At the same time, new office construction is at a 15-year low, with only 37,500 square feet of new office supply delivered nationally in Q2.
Downtown Offices Outperform Amid Flight-to-Quality
The office market continues to benefit from a flight-to-quality trend as occupiers prioritize high-quality buildings, amenity-rich environments, and transit-connected locations. Toronto remained one of the country's strongest-performing office markets, posting more than 523,000 square feet of positive absorption, reducing overall vacancy to 10.6%. Notably, vacancy within the Downtown and Midtown core fell below 10% for the first time since Q3 2022, with strong demand for Class A space.
Halifax maintained the country's lowest office vacancy rate among major markets at 8.3%, while Ottawa was the only major market to record a quarterly increase in vacancy, rising to 13.2% as a result of public-sector space reductions.
“We’ve heard the narrative that AI and hybrid work models are coming for office jobs, but the data tells a completely different story,” said Adam Jacobs, Head of Research, Colliers Canada. “What we are seeing in Toronto is a highly resilient core. Major occupiers are recognizing that physical hubs are essential for collaboration, and they are voting with their feet by taking up more space. Transit-adjacent, high-quality spaces are absorbing rapidly, proving that the office tower is far from obsolete.”
Industrial Sector Tightens Further
Canada's industrial sector continued to tighten in Q2. National vacancy fell to 3.3%, while asking rents showed signs of stabilization after several quarters of decline. Across most major markets, vacancies now sit within the 2% to 3% range, reflecting limited available supply and steady tenant demand.
Toronto's industrial market remained the tightest in the country, with vacancy declining to 2.2%, while Calgary recorded more than 1.5 million square feet of positive absorption and Montreal posted more than 660,000 square feet, demonstrating broad-based strength across Canada's largest industrial hubs.
