When the COVID-19 pandemic rolled out across Canada in 2020, downtown cores in major cities hollowed out as large office buildings rolled up their welcome mats and employees worked remotely.
Six years later, a new report from Royal LePage Commercial real estate says there is an increasing demand for office space, as companies reassess space needs and landlords adapt to new patterns of demand.
“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, Royal LePage Commercial. “What’s different heading into 2026 is the growing sense of stability."
"Businesses are no longer reacting to every economic headline and are instead taking a more deliberate, long-term approach to space planning and investment decisions.”
Jacques says although caution is still a guide, there is optimism market conditions are nearing normalization.
“As confidence gradually rebuilds, we expect to see more consistency in activity across both office and industrial markets throughout Canada,” he says. “Regional variations, however, mean this trend will unfold diversely across the country.”
The report highlights Canada’s major markets, including Calgary.
Vacancy rates in all office asset classes in the Stampede City declined in 2025 from 2024, while the industrial market saw an increase in asking rents and stable vacancy rates over the same period.
“As 2026 unfolds, Calgary’s commercial real estate market is showing clear signs of stabilization and measured growth, presenting opportunities for investors and business owners,” said Maxine Morrison, executive vice-president and real estate advisor, Royal LePage Benchmark. “Calgary has largely normalized its workplace strategy. Return-to-office mandates are no longer the primary driver of leasing activity.”
Morrison added the focus for most companies is rightsizing, optimizing, and designing spaces that encourage collaboration and employee engagement.
“This shift is evident in the increasing demand for premium, productivity-focused spaces, alongside the repurposing of older office inventory,” she said. “The market is seeing companies adapt their strategies to foster environments that strengthen culture and visibility, with small- and mid-sized enterprises actively seeking scalable, flexible spaces to support ongoing growth.”
Some former downtown office tenants are not returning the area, for several reasons, including restrictive parking and accessibility challenges downtown, which in turn is putting pressure on suburban vacancies.
“Small businesses in particular are seeking space that allows them to grow their teams and strengthen company culture, while employees are increasingly valuing visibility to management and opportunities to collaborate in person,” said Morrison. “In suburban markets, we’re also seeing strong demand from health, wellness and family-oriented businesses, including psychology, chiropractic and physiotherapy clinics, and daycares and indoor play facilities, contributing to increased office leasing activity in these areas.”
Added pressure for space is from a spillover effect from Vancouver’s industrial market, with companies finding it is more cost effective to move goods directly from the west coast to Calgary, using it as Western Canada’s inland distribution hub.
“Ongoing tariff uncertainty has had a material impact on the development of new commercial space. Unlike residential construction, commercial buildings rely heavily on steel, which has been subject to tariffs and higher input costs,” said Morrison. “E-commerce, logistics, distribution, and data centre operators are driving demand, relocating inland from West Coast ports to leverage Calgary’s geographic advantage.”
“Ongoing pre-leasing of speculative developments ensures upward pressure on net effective rents. Calgary’s infrastructure, population growth, and strategic relocations position the city for sustained industrial rent growth and office market stabilization in 2026.”
The city’s proximity to the US border is a big plus, said Morrison.
“Calgary’s geographic advantages are expected to give the city a competitive edge over Edmonton and support continued industrial growth in the future.”
