Office vacancy falls for a fourth consecutive quarter while industrial vacancy tightens for a second straight quarter, reinforcing a gradual return to market equilibrium.
TORONTO, July 8, 2026 /CNW/ – Colliers Canada released its Q2 2026 National Market Snapshot, revealing strengthening fundamentals across Canada’s commercial real estate market. National office vacancy declined to 13.4%, marking its fourth consecutive quarterly decrease, while industrial vacancy fell to 3.3%, representing a second quarter of tightening market conditions. Together, 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.
Office market: Downtowns continue to outperform
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%. Most 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 market: Tight conditions return
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.
“The industrial market continues to tighten across much of the country, particularly for larger occupiers seeking significant blocks of space,” said Susan Thompson, Director, Research, Canada, Colliers. “In markets such as Vancouver, Calgary and Toronto, constrained supply and limited new construction activity are reinforcing competition for quality industrial space.”
Supply constraints becoming more significant
Supply is at a multi-decade low, as a combination of high vacancy, lender skepticism particularly towards the office sector, and high construction costs weigh on the development market. Nationally, the development cycle is rapidly winding down, with few major projects remaining under construction. The market’s recent gains are being driven almost entirely by existing inventory, and current development economics suggest that a meaningful new wave of office construction may not arrive until the next decade.
Q2 2026 Market: Key takeaways
- Office recovery continues: National office vacancy declined to 13.4%, the fourth consecutive quarterly decrease.
- Downtown demand returns: Major occupiers continue to favour high-quality, transit-connected office locations.
- Supply pipeline shrinks: Only 37,500 square feet of new office supply was delivered nationally in Q2, highlighting increasingly limited future inventory.
- Industrial tightening accelerates: National industrial vacancy fell to 3.3%, marking a second consecutive quarterly decline.
- Industrial fundamentals remain strong: National industrial absorption exceeded 7.1 million square feet during the quarter.
The full National Market Snapshot Q2 2026, including detailed regional statistics and market commentary, is available 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 $5.7 billion in annual revenues, 27,000 professionals, and $109 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 Macaulay Nicolls Inc., Brokerage