Canadian real estate’s great divide: One market booming while the other crashes

Brian Rosen, president and chief executive officer at Colliers Canada, joins BNN Bloomberg to discuss the outlook for commercial real estate.

Canadian real estate is finally showing signs of life as workers return to the office, but condos continue to face problems, a real estate expert said.

Offices have picked up in the second quarter of the year, according to Brian Rosen, president and chief executive officer at Colliers Canada.

“It was the best quarter in Q4 for absorption in the last almost eight or nine quarters,” said Rosen.

The Ontario government mandated employees return to the office five days a week ending a hybrid model that persisted for more than five years.

A report from the CBRE Ltd. says the national vacancy rate of offices was 18 per cent at the end of 2025, down from 18.7 per cent a year earlier.

• Most recent real estate news from BNNBloomberg.ca

Rosen said the downtown core of Toronto saw an almost three per cent drop in vacancy rates. He expects vacancy rates to continue to drop over time and said more workers will return to offices.

“There was going to be a reversion to the mean at some point, and I think that is what’s happening, and it’s going to continue to happen over time, particularly as there’s no new office being built,” said Rosen.

Condos fall flat

Rosen said the condo market tanked and it’s a “complicated situation right now.”

“There are signs that we’re nearing a bottom, however, there still expects to be distress in 2026,” said Rosen.

• Latest updates on investing here

Rosen attributes the drop to a slowdown in federal immigration policies. Canada implemented tighter rules in late 2024 to reduce Canada’s unemployment rate, address housing affordability and ease pressures on healthcare and other public services.

“You had all the non-permanent resident decline that we saw on immigration, and that created a lack of demand.”

The Greater Vancouver Area saw a drop in condo prices down 5.3 per cent year-over-year.

The government is set to continue with it’s crackdown and will accept fewer new residents, students and temporary workers in the New Year.

Rosen said condos will continue to drop this year but is hopeful demand will bounce back.