In the second quarter of this year, net office leasing has stayed positive for a fourth consecutive quarter, marking the first time this has occurred since before the COVID-19 pandemic, according to CBRE’s recently published “Q2 2026 Canada Office Figures.”
“One year of solid office demand and declining vacancy is worth noting since many still question the office market,” said Marc Meehan, CBRE Canada’s research managing director.
CBRE Group, Inc. shared that seven of 11 Canadian markets tracked – led by Toronto, Calgary, and Montreal – experienced positive net absorption of office space.
CBRE noted an improvement in downtown fundamentals for all except one Canadian market. Most cities reported a tighter second quarter and lower vacancies across all office space classes.
CBRE said Toronto, Calgary, and Montreal separately saw an absorption of more than 300,000 square feet, with most activity concentrated in the suburban Greater Toronto Area. Nine of 11 cities – led by Edmonton, with 120 fewer basis points (bps) – witnessed declining downtown Class A vacancy.
Regarding trophy space, CBRE shared that these office buildings experienced a 9.4 percent vacancy rate, just 100 bps higher than prior to the pandemic’s onset. With a 2.6 percent AAA vacancy rate, downtown Toronto had the least available trophy space.
“The first stage of the Canadian office recovery was in trophy buildings and it’s encouraging to see demand trickling down into the next-best spaces,” Meehan said. “The balance of Class A was the primary beneficiary, however even Class B/C vacancy is starting to improve amid a mix of transactional activity and the removal of inventory for building conversions.”
In the second quarter, CBRE noted that only one new office construction project commenced. The Vancouver development was just the third to begin in the country in the past 12 months and the first in the city since 2024. CBRE added that new office inventory was at a record low of 1.2 million square feet.
In the realm of office conversion and demolition, CBRE acknowledged that just two projects have moved forward in the second quarter. CBRE noted a 2.6 percent decrease in national office inventory since 2021, with conversions removing 9.1 million square feet and demolitions taking out 3 million square feet.
Decline in industrial availability
CBRE highlighted a decline in the national industrial availability rate for the first time since the third quarter of 2022, easing 10 bps quarter over quarter to 5.5 percent, according to CBRE’s recently “Q2 2026 Canada Industrial Figures.”
“Canadian industrial markets are holding steady, and fundamentals are more or less balanced,” Meehan said. “Industrial momentum, in either a positive or negative direction, is likely to become apparent later in the year as the Canada-US-Mexico Agreement (CUSMA) negotiations take shape.”
According to CBRE, nine of the 11 industrial markets tracked reported flat or decreasing space availability. CBRE noted modest national net absorption of 3.9 million square feet, representing the third consecutive quarter of positive leasing.
In terms of leasing activity, eight of the 11 markets – led by Toronto with 1.3 million square feet, Montreal with 786,000 square feet, and Calgary with 626,000 square feet – experienced positive net absorption.
CBRE noted modest new industrial supply at 2.4 million square feet, the lowest quarterly amount since the third quarter of 2017. In this year’s second quarter, Toronto accounted for 45.4 percent of the new supply, while Calgary had 18 percent and Montreal had 15.7 percent.
For construction starts, which slowed for the third consecutive quarter, CBRE said speculative projects comprised 89.4 percent of the total 4.2 million square feet. Because new projects outnumbered those completed, the under-construction pipeline grew by 7.6 percent over the quarter to 25.3 million square feet.