“Uncertainty” remains the watchword for commercial real estate in 2026, according to CBRE’s Canada Real Estate Market Outlook, which nonetheless forecasts a significant eight per cent-plus rise in real estate property sales to one of its highest-ever levels.

When added to merger and acquisition activity and portfolio deals, the outlook forecasts up to $56 billion in total investment volume for 2026, which would be the third-highest year on record. In 2025, that figure was $47 billion.

The forecast also contains more hopeful news for the office sector.

“We’re coming off a year of uncertainty, but international capital has already voted in favour of Canadian commercial real estate,” CBRE Canada president and CEO Jon Ramscar said in a release accompanying the outlook. “We have seen assets purchased across the country due to our strong fundamentals and relative stability. 

“In 2026 we expect widespread and competitive participation from all sources of capital, domestic and international. Not to mention that the resurgent office market will spur transactions and our retail market remains solid.”

That would continue a trendline which began in 2025, the outlook states. CBRE reports “modest, organic growth” in investment volumes during each quarter of 2025 over 2024 levels.

It also notes the purchaser profile started to broaden, with greater participation in particular from institutional groups, which have largely been on the sidelines for the past couple of years.

CBRE forecasts national average cap rates to hold steady or compress slightly in 2026.

Office sentiment has improved

In its outlook for the various asset classes, the report sees improved sentiment and “a phase of sustained growth” in the office sector, leading to increased investment. Return-to-office mandates from large private-sector employers and governments, combined with “robust debt liquidity for high quality assets” should drive this momentum.

The sector has experienced two years of net absorption nationwide, and vacancy seems to have peaked. There are also no major office developments under construction in Canada which will complete between post-Q1 of this year and 2030, creating a “structural right-sizing” of space.

The forecast is for positive net absorption of up to 5.1 million square feet - more than twice the 20-year annual average - about half of that in Toronto. Vancouver, suburban Calgary, Kitchener-Waterloo and downtown Montreal are also expected to see activity, while the recovery could be slower in downtown Calgary, Edmonton, Ottawa and Atlantic Canada.

A series of high-profile, trophy asset trades during 2025 leads CBRE to predict a return to more traditional office investment volumes. It states in the 10-year period prior to the pandemic, office investment accounted for, on average, 23 per cent of total annual volumes. Over the past few years, it has averaged 11 per cent.

“Alongside a receptive debt market that has opened up to the asset class, albeit mostly for high-quality class-A product, office investment volumes are set to rebound back to levels more consistent with its historical share of total activity,” the report states.

Multifamily, industrial and retail

It identifies seniors housing as an ongoing bright spot in the otherwise temporarily challenged multifamily sector. With an aging population, the sector has “exceptional tailwinds,” the report states, and more investors are expected to enter the asset class.

Multifamily is now being impacted by a potential glut of completions, which will affect already sagging rental rates in most major markets. This is due to the federal government’s dramatic pullback on immigration numbers, as the CMHC continues to focus heavily on financing a large volume of major rental housing projects.

Vacancy in every major Canadian metro increased during 2025, a trend expected to continue through 2026 until population growth rebounds - likely later in this decade. The forecast is for a 4.5 per cent vacancy rate nationally by the end of 2026.

Industrial is nearing an “inflection point” and will be heavily dependent on the CUSMA trade negotiations between Canada and the United States this summer. Despite this, the forecast is for over 20 million sq. ft. of net absorption in 2026, recovering to levels in line with pre-pandemic norms. 

It also predicts leasing rates will hit a floor in 2026, and level off as vacancy also stabilizes around 5.5 per cent, just below the 5.6 per cent rate in Q4 2025. The flight-to-quality trend which has developed in recent years is expected to continue.

The report states small- to mid-bay properties are likely to see the strongest demand.

Trade concerns critical factor

“Trade remains an overarching concern for the Canadian industrial market as a review of the Canadian-United States-Mexico Agreement is scheduled for July,” the report states. “The resilience of the Canadian economy in the face of U.S. tariffs so far has been mainly due to CUSMA; its preservation is critical to stabilizing the industrial market.”

Retail, it notes, has stabilized although results are expected to vary widely by region - with secondary and tertiary markets potentially seeing the strongest results. The demise of HBC in 2025 opened large spaces in tight markets, which CBRE states are drawing strong interest from entertainment uses and other large-format retailers.