Vacancy rates for Canadian office and industrial properties declined in the first quarter, according to a new data report from Colliers.
National office vacancy declined by 100 basis points year-over-year to 13.6%, which Colliers described as “one of the most significant improvements since the onset of Covid.” Leasing activity strengthened in Downtown Class A buildings, while a limited new supply – less than 2 million square feet of office space under construction – is expected to fuel increased tightening. Simultaneously, competition for premium office space has moved the market from a “flight to quality” to a “fight for quality.”
“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 in Canada for Colliers. “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.”
At the same time, Canada’s industrial market recorded its first national decline in vacancy since 2022. Absorption totaled 3.6 million square feet during the first quarter, outpacing 3 million square feet of new supply, with five of six major markets recording quarter-over-quarter vacancy declines. During the first quarter, 5.6 million square feet of new projects broke ground, primarily in the nation’s major metro areas.
“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.”
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