Canada’s office and industrial real estate markets are entering 2026 on steadier ground, after several turbulent years caused by the pandemic, remote work and global trade disruptions.

A new report from Royal LePage Commercial says the commercial market continues to evolve to match how and where businesses operate.

Industrial activity has cooled in many markets amid tariff uncertainty and broader economic concerns, while office leasing is gradually recovering as more employers bring staff back in person, says Royal LePage.

“Much like the residential real estate sector, broader economic uncertainty has weighed on commercial real estate decision-making in recent years,” said Matt Jacques, interim general manager of Royal LePage Commercial. “What’s different heading into 2026 is the growing sense of stability.”

Jacques said businesses are no longer reacting to every headline and are instead taking a longer-term approach to space planning, and there is optimism that conditions are beginning to get back to normal.

Nationally, labour market shifts are also shaping the market. The employment rate edged down to 60.8% in January, with the greatest losses in the manufacturing and transportation sectors. Gains were recorded in service-oriented industries, like healthcare, construction and retail.

Return-to-Office Stabilizes Downtowns

Office markets, particularly in downtown cores, were hit hard by the rapid shift to remote work in 2020. Now, return-to-office mandates are expected to support a rebound in leasing.

Royal LePage notes that since 2025, major employers, including Royal Bank of Canada, Rogers Communications and Starbucks Canada, have required employees to return three to five days a week. Federal public servants will be back in the office four days per week beginning this summer.

The market is not returning to its pre-pandemic form, said Jacques. Rather, “it is evolving into something more deliberate and intentional,” he said. Employers are focusing less on the amount of space they occupy and more on how it is used, prioritizing collaboration and employee experience, he said.

According to a survey of Royal LePage commercial professionals, 66% expect demand for office space in their markets to increase modestly or remain stable in 2026. 5% expect a significant increase, and 42% anticipate vacancy rates will decline this year.

Industrial Space Weather Trade War

Manufacturing sales surged in the early days of the post-pandemic recovery and have generally remained strong, supporting demand for warehousing and distribution facilities.

More recently, however, ongoing trade disruptions and tariff pressures have weighed on parts of the sector, contributing to a modest decline in manufacturing sales in 2025.

“Looking ahead, a slowdown in new construction and ongoing supply chain realignment will support market balance. As businesses prioritize efficiency and speed to market, the creation of modern industrial facilities will remain a critical component of Canada’s commercial real estate landscape.”

Nearly half of Royal LePage commercial experts expect occupier demand for industrial space to increase in their respective markets in 2026.

Outlook Varies by City

Across the country, Canada’s office and industrial sectors are moving at different paces,

Some major centres, like the Greater Toronto Area, are beginning to see renewed momentum in office leasing as return-to-office mandates gain traction.

Others, however, such as downtown Vancouver and Calgary, continue to lag or have already largely returned to in-person work.

Industrial markets are similarly out of sync. Certain cities have felt the impact of trade tensions and tariff uncertainty more heavily, particularly those with higher concentrations of manufacturing or export-driven industries. In contrast, regions supported by diversified economies, logistics infrastructure and domestic-focused industries have demonstrated greater resilience.

“Each region has its own economic drivers, labour dynamics and industry mix,” said Jacques. That diversity means performance will continue to vary by city and property class.”

Commercial Forecast : Strong Downtown Office Leasing Meets Softer Industrial Market by REM Real Estate Magazine