Ottawa commercial real estate leasing activity shifted into high gear through the first half of 2026, even as limited sales inventory and investor risk-aversion kept transaction volumes measured. According to Sam Moussa of REMAX Hallmark, who contributed insights to the REMAX Fall 2026 Canadian Commercial Real Estate Report, demand remains exceptionally strong across key asset classes. Industrial availability tightened to four per cent in Q2* as occupiers actively competed for space along Highway 417, while retail businesses concentrated demand on smaller 1,500-sq.-ft. footprints in suburban strip malls and plazas. At the same time, Ottawa drove significant national activity in Q2, recording $1.7 billion in regional investment—a 52 per cent year-over-year increase*—fuelled by robust multi-family momentum and renewed confidence in the downtown office core following federal return-to-office mandates, highlighted by the $143-million acquisition of 150 Slater Street.

This regional momentum aligns with the central findings of the national report, which highlights a selective, income-driven commercial recovery taking shape across Canada. As investors nationwide navigate high replacement costs and strict lending criteria by prioritizing established, cash-flowing assets over speculative development, Ottawa stands out as a prime example of a market driven by end-user demand and institutional return. The nation’s capital demonstrates how local economic anchors—such as federal workplace mandates, healthcare and professional service expansions, and steady multi-family construction—can bolster market confidence and drive significant capital deployment even amid broader national economic uncertainties.

Ottawa Commercial Real Estate Market Overview

Highway 417 Corridor Demand Tightens Ottawa Industrial Availability

According to Moussa, industrial demand remains exceptionally strong, with the availability rate sitting at four per cent in Q2 2026.* Leasing activity has accelerated, putting upward pressure on rates as tenants compete for available space. Demand continues to outpace supply despite thousands of square feet of new construction along Highway 417. Limited industrial properties for sale, both on and off market, have also stifled transactions. Although industrial land remains available for development, risk-averse investors and end users are reluctant to build amid financing challenges and economic uncertainty.

Downsizing Businesses and Service Providers Focus on Compact Retail Spaces

Retail is experiencing a similar dynamic, with businesses competing for prime product and locations. New business owners are increasingly seeking space, with approximately 1,500 sq. ft. remaining the sweet spot for mom-and-pop operations such as smaller restaurants, bakeries, cafés, barber shops, salons, spas, and yoga and Pilates studios. Retail tenants are no longer routinely seeking thousands of square feet, as once was common for restaurant chain many are now downsizing or leaving sections closed due to fewer diners or staffing shortages.

Medical Practices and Suburban Repositioning Drive B- and C-Class Space Demand

Medical and dental practices, once concentrated in medical office buildings, are increasingly choosing retail space in popular strip malls and plazas. Others are purchasing smaller B- and C-Class suburban office buildings in Kanata, Barrhaven, Stittsville and Orleans, repositioning them for their own use while leasing excess space to other professionals.

Federal Return-to-Office Mandates Fuel Downtown Office Core Revitalization

A-Class office space and well-located B+ product downtown continue to attract top-tier tenants, although overall office availability edged up to 14.5 per cent* in Q2 2026. The downtown core is beginning to revive as federal return-to-office mandates generate renewed optimism. Two office tower sales recently closed as institutional investors returned, including the EDC building at 150 Slater St., which sold for $143 million.

Owner-Operators Command Premium Rents Through West-End Office Retrofits

Older B- and C-Class buildings appeal to a more limited audience, though some professionals are seeking smaller office investments of approximately 20,000 sq. ft. in areas such as west-end Kanata. While upgrades can require significant capital, owner-operators completing commercial retrofits can often command $28 to $30 per sq. ft. for ground-floor suites and $19 to $20 per square ft. net for second- and third-floor space.

Record Rental Completions Moderating Ottawa Multi-Family Rent Growth

As the office market recovers, multi-family conversions have subsided. New rental construction continues even as demand for new rental product softens. Urbanation’s Q1 2026 report found that slower population growth, a softer job market and increased selection, with rental apartment completions near record highs, have pushed rents lower and sharply increased tenant incentives. Ottawa is on track to complete more than 4,000 purpose-built rental units this year, nearly matching 2025’s multi-decade high.

Q2 Investment Surge Reaches $1.7 Billion as Ottawa Leads Regional Growth

Ottawa also drove national commercial real estate growth in Q2, with regional investment reaching $1.7 billion, up 52 per cent year-over-year.* Led by multifamily activity and renewed office-sector confidence following return-to-office mandates, current leasing and investment activity remained relatively strong through the reporting period, although future market performance will depend on economic and capital market conditions. Limited industrial and retail product remains the key constraint, and while additional inventory could support higher transaction volumes, the magnitude of any increase is uncertain.

*Source: Altus Group, Altus Data Studio