Office, industrial real estate vacancies dropping amid strong demand: Colliers report

Condo and office towers are seen in downtown Vancouver, on Tuesday, April 25, 2023. A new report by Colliers Canada predicts the national office vacancy rate could peak at approximately 15 per cent by the end of 2024 as the rise of hybrid work models prompt companies to reduce their office space.THE CANADIAN PRESS/Darryl Dyck

TORONTO — A new report says Canada’s commercial real estate sector is seeing strong demand for downtown office space alongside shrinking industrial supply.

Colliers Canada’s second-quarter market outlook, released Wednesday, says the national office vacancy rate fell for the fourth consecutive quarter to 13.4 per cent, while industrial vacancies tightened for the second straight quarter to 3.3 per cent.

Colliers says these trends suggest the commercial real estate market is undergoing a “steady and measured” recovery driven by occupier demand, improving absorption levels and an increasingly constrained development pipeline.

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Downtown office space is driving the boost in demand, as the report says tenants are prioritizing high-quality buildings that have amenities and are connected to transit.

Adam Jacobs, head of research at Colliers Canada, says companies are recognizing that physical hubs “are essential for collaboration,” helping to debunk predictions that AI and hybrid work models would replace office jobs.

While uptake continues to improve, new office construction has fallen to a 15-year low, with only 37,500 square feet of new supply delivered nationally in the second quarter.

This report by The Canadian Press was first published July 9, 2026.

Sammy Hudes, The Canadian Press