Commercial CRE vacancy softens
Colliers' Q1 snapshot flagged a modest improvement in national commercial markets with office vacancy down about 100 basis points year-over-year to 13.6% and industrial vacancy easing for the first time since 2022 (x.com). That shift suggests selective CRE exposures may be stabilising even as the residential renewal shock plays out elsewhere (x.com).
After four years of empty desks and too many warehouses, Canada just got a small break: Colliers said national office vacancy fell to 13.6% in the first quarter of 2026, down 100 basis points from a year earlier, and industrial vacancy fell too for the first time since 2022. (collierscanada.com) That does not mean every tower is full or every logistics park is booming. It means the national numbers finally stopped moving in one direction, which had been “more empty space” since the pandemic and the e-commerce building surge. (collierscanada.com) The office side is improving for a simple reason: fewer companies are giving back space, more leasing is happening in downtown buildings, and almost no big wave of new offices is arriving to swamp the market. Colliers said less than 2.0 million square feet of office space is now under development across Canada. (collierscanada.com) That construction number matters because the market looked very different in 2021 through 2023. During eight straight quarters in that period, Canada added an average of 1.8 million square feet of new office supply every quarter, and national vacancy rose by more than 100 basis points. (collierscanada.com) The industrial side is a different story. Warehouses were overbuilt after companies rushed to secure space during the supply-chain panic, so vacancy rose as deliveries caught up with demand; now Colliers says five of the six major industrial markets it tracks posted quarter-over-quarter vacancy declines and the sixth was flat. (collierscanada.com) This is also not just a Canada-only pattern. In the United States, Cushman & Wakefield said on April 6 that office demand has been improving for a year, national vacancy was 20.2%, and the annual increase was only 5 basis points, the smallest since the pandemic began. (cushmanwakefield.com) The catch is that the recovery is getting picky. Colliers said leasing is concentrating in downtown nodes, and Canada office figures from CBRE show downtown vacancy kept edging lower while weaker buildings and weaker submarkets still lagged. (collierscanada.com) (cbre.ca) That split matters for lenders and investors. A newer downtown tower with tenants signing leases is a different credit from an older office block waiting for a conversion plan, even if both sit inside the same city average. (collierscanada.com 1) (collierscanada.com 2) It also explains why better commercial numbers can show up at the same time as stress in housing. The Bank of Canada said about 60% of mortgage holders renewing in 2025 and 2026 are expected to see payment increases, and Canadian Mortgage and Housing Corporation said arrears are likely to keep rising moderately into late 2026, with Toronto and Vancouver most at risk. (bankofcanada.ca) (cmhc-schl.gc.ca) So the story is not “commercial real estate is fixed.” The story is that one part of property markets is starting to look like a slow cleanup instead of a fresh slide, just as the pressure is shifting toward households rolling over old cheap mortgages into newer, higher-rate ones. (collierscanada.com) (bankofcanada.ca)
