Kelowna commercial real estate market remained steady in the first half of 2026, with activity broadly comparable to the same period in 2025 and transactions across all asset classes, according to Kelowna-based Kris McLaughlin of REMAX Kelowna, who provided insight for the REMAX Canada Fall 2026 Commercial Real Estate Report. According to McLaughlin, investor interest remains strong, but buyers are more cautious, conducting greater due diligence and focusing on property-level fundamentals. Capital remains available, although financing is subject to more selective underwriting.

This local pivot directly reflects the broader themes identified in the national report. Across the country, commercial real estate investment gained momentum, yet investors nationwide made every dollar count by concentrating capital in established, income-producing properties and navigating a national landscape where localized economic drivers and supply dynamics increasingly defined success.

Kelowna Commercial Real Estate Market Overview

Multi-Tenant Retail Leads Investor Interest

Multi-tenant retail attracts the greatest investor interest, particularly well-positioned properties with strong tenants, although cap-rate compression is becoming a more common conversation topic. Cap rates range from 4.8 to 5.4 per cent, up slightly from the past couple of years. Retail lease rates have edged up marginally from last year, ranging from $27 to $42 per sq. ft. on a net basis for Class A space and $22 to $30 per sq. ft. for Class B space. Most businesses are seeking approximately 1,200 to 2,000 sq. ft. with good exposure. Demand also remains steady for spaces of 2,000 to 4,000 sq. ft. as businesses continue to right-size. Some properties offer subdivision or reconfiguration options, including the former Canadian Tire store on Leckie Road, following the retailer’s October 2025 relocation to a larger Highway 97 store.

Residential Land & Multi-Family Construction Slows

Development land activity and multifamily construction have slowed amid oversupply concerns, higher construction costs and tighter financing. CMHC’s 2025 Rental Market Report recorded a purpose-built rental apartment vacancy rate of 6.4 per cent in the Kelowna CMA, up from 3.8 per cent in 2024 and among the country’s highest. New supply, slower population growth and affordability pressures have contributed to softer rental conditions. Average one-bedroom rents in the surveyed stock increased to nearly $1,600 per month. This measure differs from asking rents for newly available units.

Office Vacancy Edges Up Amid Cost Sensitivity

Office vacancy has also edged up, while tenants remain cost-conscious. Return-to-office mandates are unlikely to materially reduce available space, with options from shell to turnkey product ranging from 2,000 to 20,000 sq. ft. Some landlords are offering turnkey space at $28 to $36 per sq. ft. to attract quality tenants, but absorption must improve before the market stabilizes.

Industrial Fundamentals in Gradual Recovery

Industrial fundamentals remain in recovery, with vacancy only starting to trend lower again. Higher construction costs are creating hesitancy around new development. Rents for new product that previously leased for $16 to $18 per sq. ft. are now closer to $15 to $17 per sq. ft., making new projects harder to justify. If new projects do not proceed, an undersupply could emerge in a few years.

Notable REMAX Commercial Transactions

Notable recent REMAX vendor-represented transactions include 1953-1955 Baron Road, a fully leased retail/commercial building on approximately 1.19 acres that was offered for $5.85 million; 3001 Tutt Street, a three-storey retail/office building that was offered for $10,200,000; 9013-9021 Jum Bailey Road, a multi-tenant industrial property on approximately 1.01 acres that was offered for $4,700,000. REMAX also represented the purchaser of 1753 Dolphin Avenue, a multi-tenant property of more than 14,000 sq. ft. that was offered at $5,170,000.

Slower Population Growth Shifted Market Dynamics

Population growth has slowed. Statistics Canada reported that the Kelowna CMA’s population grew 1.2 per cent between July 1, 2024 and July 1, 2025. Overall, Kelowna has shifted from rapid expansion to a more disciplined market: capital remains available, but investors are more discerning and focused on income, tenancy and long-term fundamentals. Well-priced properties remain positioned to attract buyers, while tighter financing, higher construction costs and more subdued growth temper activity.