Article
Canada’s Office and Industrial Markets Show Strength in Q3
October 19, 2026
The third quarter brought encouraging news for Canada’s office and industrial markets.
CBRE’s Q3 2026 Office and Industrial Figures show national office market momentum remaining positive for a fifth consecutive quarter and strong industrial demand leading to the largest quarterly decline in availability of space in five years.
“It’s time to turn the page on the office recovery,” says CBRE Canada Research Managing Director Marc Meehan. “That recovery is well entrenched and with fundamentals on solid footing we’re seeing the advantage in lease negotiations move from tenants to landlords in more cities.”
Regarding industrial, Meehan noted that “with trade disputes ongoing, we keep waiting for the other shoe to drop in the industrial market. Aside from some challenges in Southwestern Ontario, however, the industrial market has performed well in 2026.”
Here are some takeaways from the third quarter reports.
Positive Leasing Momentum
National office leasing was strong in Q3, with a total of 2.0 million sq. ft. of net positive absorption of space.
More cities are reporting back-to-back quarters of positive net absorption. Calgary’s momentum has continued to build over the last three quarters, and it’s the same story in Montreal, where a large block of AAA office space was leased in the third quarter alongside healthy activity in the suburbs.
Office vacancy has improved in downtowns and in the suburbs across Canada, with both segments declining by 50 bps this quarter on a national basis. This represents the largest quarterly decline for the suburban market nationally since Q1 2020.
Canada’s industrial market also saw strong demand in the third quarter, bringing the national availability rate down to 5.2% - the largest quarterly decline seen in five years. Most industrial markets now have lower availability rates year over year.
National net absorption of industrial space surged to 10.3 million sq. ft., the highest quarterly total since Q4 2022. And net industrial leasing year to date is already well ahead of the full-year totals of the previous three years.
Sublease Space Retreats
Canada’s office market saw national inventory of sublease space fall by 1.3 million sq. ft. in Q3 2026, the single largest quarterly decline since 2005.
Sublet space inventory has fallen 8.7 million sq. ft., or 50.2%, from its peak over three years ago, highlighting improved occupier sentiment.
On a year-over-year basis, all markets except Ottawa are reporting lower office sublease levels as a percentage of inventory, with four of 11 markets down by more than 100 basis points in the third quarter, including London (-140 bps), Toronto and Montreal (both -120 bps) and Waterloo Region (-110 bps).
Canada’s industrial market saw its first meaningful quarterly reduction in sublease space in Q3, falling from the record high by 1.1 million sq. ft. quarter-over-quarter to 14.5 million sq. ft.
The largest quarterly declines in industrial sublease space were seen in Montreal (-574,000 sq. ft.), Toronto (-305,000 sq. ft.) and Edmonton (-291,000 sq. ft.).
Construction Holds Steady
National office construction increased for the first time in four years in Q3, and currently totals 1.4 million sq. ft. The overall pipeline remains just below the previous 22-year low.
The total national office pipeline is currently only 23.2% pre-leased, with the market focusing instead on existing product. Full-year new supply is expected to reach just 2.3 million sq. ft., well below the five-year average.
Similarly, industrial construction starts rose slightly to 5.2 million sq. ft. worth of new projects in Q3 2026, with the activity remaining in line with the stabilized pace of the last few quarters.
Industrial development in every market in Q3 continued to hold at conservative levels, with nearly all cities building at less than 2.5% of their inventories.
New supply came in at 5.4 million sq. ft. nationally in the third quarter, an increase from the second quarter but well below the market high hit a couple of years ago.
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