Canadian Commercial Real Estate Set for Major Rebound in 2026

Something interesting is happening in Canadian commercial real estate. After a couple of years that felt like holding your breath underwater, the market is finally coming up for air.

CBRE's latest forecast predicts commercial property investment will hit around $56 billion this year, jumping more than 8% from last year's $47 billion. If that number holds, it'll be the third-highest sales total in Canadian commercial real estate history.

Not bad for a market that's been nursing bruises for a while.

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Why International Money Keeps Betting on Canada

Here's what's actually driving this recovery: international investors are putting their money where their confidence is. And right now, they're confident in Canada.

"We're coming off a year of uncertainty, but international capital has already voted in favour of Canadian commercial real estate," Jon Ramscar, CBRE's Canada president and CEO, said in the report. The reasoning makes sense when you think about it. When global markets get choppy, investors look for places that won't give them an ulcer. Canada screens pretty well on the stability front.

That doesn't mean everything's smooth sailing. The domestic economy still has its question marks, and that uncertainty could slow down decision-making throughout the year. But compared to what's happening elsewhere in the world? Canada looks downright reliable.

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The Office Market Turns a Corner

Remember when everyone was writing obituaries for office space? Yeah, about that.

The office sector has stabilized and is actually moving toward growth after two years of positive net absorption. The national vacancy rate peaked and started dropping, falling to 18% at the end of 2025 from 18.7% the year before. It's still way above the pre-pandemic rate of 10.9%, but the trend line is finally pointing the right direction.

What changed? Return-to-office mandates. Public and private sector employers are calling workers back, and that's breathing life into a market that was on life support. National absorption for office space is projected to more than double the historic average this year.

But here's the catch. Almost no meaningful new office construction is coming online between now and 2030. New building starts hit a record low last year, and construction levels are at their lowest point in 20 years. That means companies hunting for premium space with good amenities are going to face stiffer competition and fewer choices.

High-quality office buildings in places like Toronto and Montreal are already seeing their vacancy rates compress significantly. The trophy buildings and Class A properties are getting snapped up while older Class B and C offices are still struggling. It's a tale of two markets.

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Industrial Real Estate Sits at a Crossroads

The industrial sector has what CBRE calls "largely balanced" fundamentals right now. But there's a big asterisk attached to that assessment.

July brings the scheduled review of the Canada-United States-Mexico Agreement (CUSMA), and that could be a turning point. CBRE is blunt about it: preserving that trade pact is key to stabilizing the industrial market. Canada's economy has held up remarkably well against U.S. tariff pressures largely because of the carveouts from CUSMA.

If the trade deal stays intact, CBRE expects demand for industrial space to climb, pushing net absorption back above 20 million square feet this year. That would bring the market back in line with pre-pandemic norms.

The stakes are high. Trilateral trade reached over $1.9 trillion in 2024, and the USMCA market covers 30% of global GDP. That's not pocket change.

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Retail Gets a Stability Boost from Unlikely Source

The retail real estate sector is looking more stable than it has in years. Major brands are expanding into new markets across the country, and while retail sales growth will be "steady but slow" according to CBRE, with households still cautious about spending, there's an odd silver lining to the gloom.

Hudson's Bay collapsed under debt and closed all its stores after 355 years in business, shuttering its last locations by June 2025. Losing Canada's oldest retailer hurt. But the closure unlocked something valuable: millions of square feet of prime retail space in a tight market.

Landlords are now reimagining those large footprints, and they're getting strong interest from entertainment venues and large-format retailers. It's one of those situations where the end of something old creates room for something new, even if you wouldn't have chosen that path.

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The Bigger Picture

Canadian commercial real estate is heading into 2026 with momentum it hasn't had in years. The $56 billion investment forecast isn't just a number, it reflects genuine institutional capital returning to the market after sitting on the sidelines.

Different property types will perform differently. Offices are recovering but face supply constraints. Industrial real estate depends heavily on trade policy that's still being negotiated. Retail is finding its footing in a consumer environment that's cautious but not catastrophic.

The uncertainty hasn't disappeared. The domestic economy could still throw curveballs. Global instability could shift investor sentiment. Trade negotiations in July will matter more than most people realize.

But for the first time in a while, the Canadian commercial real estate market has something it's been missing: forward momentum with real conviction behind it. International capital is flowing in. Domestic players are getting more competitive. And the fundamentals, while not perfect, are solid enough to build on.

That's a better starting point than this market has had in years.