Vancouver respondents describe "clear signs of recovery across most asset classes," with some of the lowest office vacancy rates in North America
Canadian commercial real estate heads into 2026 with sentiment notably stronger than a year earlier, as lower rates, fiscal stimulus and a stabilizing economy encourage investors to look beyond a long stretch of caution.
Avison Young’s 2026 Canadian Outlook, based on nearly 200 internal responses, found that 97% of professionals expects activity to be stable or higher next year, with 64% anticipating growth.
That contrasts with the firm’s mid‑2025 survey, when almost half projected only steady conditions and far fewer expected an upswing.
"Optimism is in the air, with a focus on recovery and growth among all sectors across the Canadian commercial landscape heading into 2026," said Mark Fieder, principal and president, Avison Young Canada.
"Although confidence is the overarching sentiment for the year ahead, we were closely monitoring tariff measures and resulting slowdowns largely driven by declining exports in sectors closely tied to U.S. supply chains, such as automotive and machinery."
Sentiment turns across major markets
Fieder’s comments built on a year when Avison Young reports that investment volumes remain broadly in line with 2024 and that the third quarter of 2025 is the strongest for sales since 2022.
"Further interest rate cuts by the Bank of Canada could positively stimulate investor appetite," the outlook said, with investors already gravitating to industrial, well-located multifamily and higher‑quality office.
Vancouver respondents describe "clear signs of recovery across most asset classes," with some of the lowest office vacancy rates in North America and renewed interest in large industrial blocks, even as small-bay users move more cautiously.
Montreal professionals said their market outlook is "significantly higher," with 74% expecting increased activity, citing undervalued assets, new transit infrastructure and federal incentives as catalysts.
In Toronto, 74% of Avison Young professionals expect stronger activity in 2026 and a further "flight to quality" in office, while GTA suburban and Southwestern Ontario brokers point to rate cuts of 2.25 percentage points and ongoing industrial demand as reasons for "cautiously optimistic" expectations, alongside pressure from tariffs, power constraints and labour gaps.
City snapshots and implications for lenders
Ottawa respondents unanimously expect activity to hold or improve, helped by federal return‑to‑office mandates and growth in defence‑related industries.
Edmonton professionals, 95% of whom anticipate at or above current activity levels, highlight interprovincial migration and generous office incentives.
Calgary survey participants point to GDP expected to grow by nearly 2.5% and continued in‑migration as drivers of a "slightly higher" outlook, with industrial and multifamily still leading performance.
"Commercial real estate continued to stand out as a reliable hedge against inflation and a source of stable cash flow," said Matthew McWatters, principal, managing director and Canadian leader, valuation and advisory services.
"Despite market noise, investment volumes in 2025 were holding steady at around $21 billion, with Q3 marking the strongest sales quarter since 2022. Institutional investors were increasingly focused on quality opportunities, making timely, accurate valuations essential to navigate uncertainty and refine strategy."
"Within Canadian project management services, 2026 looked steady, with signs of growth and improving conditions," said Arlene Dedier, principal, managing director and Canadian leader, project management services.
"Costs and tariffs remained a factor, but demand and feasibility were trending in the right direction. For those planning ahead, thoughtful investments then could position them for long‑term success."
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