Return-to-office momentum lifts offices while trade pressures reshape industrial demand outlook
Canada’s commercial real estate sector is entering a period of normalization as employers refine workplace strategies and global trade disruptions reshape industrial demand.
For investors and advisors, 2026 is emerging less as a rebound year and more as a transition toward steadier, long-term decision-making. After several years of pandemic disruption and economic volatility, occupiers appear increasingly focused on strategic planning rather than short-term reactions.
A new Royal LePage Commercial report points to a more stable investment environment compared with recent years. Businesses are showing greater confidence and are taking a more deliberate approach to space planning and investment decisions, supporting expectations for more consistent activity across both office and industrial markets. However, regional differences remain significant and will shape how recovery unfolds across the country.
Labour market shifts continue to influence how companies use commercial space. Canada’s employment rate slipped slightly in January to 60.8 per cent, reflecting job losses in manufacturing, transportation and warehousing.
At the same time, gains in healthcare, construction, retail trade and other service sectors suggest changing economic priorities rather than overall contraction. These trends are expected to shape leasing decisions, reinforcing demand for flexible, well-located office environments and efficient industrial facilities aligned with evolving workforce needs.
Office markets are gradually regaining momentum as employers formalize in-person attendance policies. Major organizations, including Royal Bank of Canada, Rogers Communications and Starbucks Canada, have reintroduced structured office schedules, while federal public servants are expected to increase attendance later this year. Rather than returning to pre-pandemic norms, the office sector is evolving toward more intentional workplace strategies that emphasize quality space and employee experience.
Industry sentiment reflects cautious optimism. Most Royal LePage experts expect office demand to hold steady or increase modestly this year, alongside gradual improvements in vacancy rates. In the Greater Toronto Area, return-to-office mandates from banks, government offices and technology firms have already strengthened demand for premium downtown space.
Industrial real estate remains one of the sector’s strongest asset classes, supported by logistics demand, supply chain restructuring and sustained manufacturing activity following the post-pandemic recovery. However, tariffs and broader global trade uncertainty have softened momentum in some markets.
Demand for well-located, functional industrial space remains strong, particularly in logistics-focused regions where proximity to transportation corridors, ports and population centres continues to drive occupier interest. A slowdown in new construction, combined with ongoing supply chain realignment, is expected to help restore market balance while supporting long-term fundamentals.
Performance continues to vary widely by region and asset quality. Industrial conditions remain mixed as smaller tenants face higher renewal costs after signing leases during the pandemic surge. For investors, Canada’s commercial outlook increasingly depends on local economic drivers, tenant quality and modern, well-located assets rather than broad national trends.
