Stability has continued to underpin the Ottawa commercial real estate market, positioning the nation’s capital as one of the top performing commercial markets across almost all asset classes. The city reported a modest increase in commercial activity year over year, while inventory constraints in industrial and retail have supported values. In fact, some highly sought-after properties have leased and sold in multiple offers in recent months.
Industrial remains dominant in Ottawa
Demand has remained greatest for industrial properties in Ottawa, with limited availability and stringent zoning policies regarding land assembly in the city’s core constricting new development. According to the most recent stats available from Altus Group, industrial availability edged lower at 4.3 per cent in Q4 2025, down from 4.4 per cent in Q4 2024. Over the past year, Real Estate Investment Trusts (REITs) and institutional investors have re-emerged as more active buyers in Ottawa’s industrial market.
National market continues to evolve
REMAX Canada’s national 2026 Commercial Real Estate Report examined first-quarter activity across 12 major Canadian markets and found that the commercial property market has continued to evolve with improved absorption, particularly in the office sector, where return-to-office mandates are supporting increased leasing activity in premium space. Industrial demand has remained durable nationwide, with inventory challenges persisting. Retail fundamentals have continued to outperform expectations, supported by population growth and infrastructure investment, reinforcing long-term demand. While capital deployment has been measured in most markets analyzed, improving financial conditions have prompted renewed interest in well-located, income-producing assets.
Owner-occupiers have been most active in the Ottawa marketplace at present, with the lion’s share seeking warehousing facilities offering 20,000 to 30,000 sq. ft. with small front offices, 25- to 35-ft. ceilings, power and loading docks. Given land requirements, this type of product has remained limited within the city, forcing businesses to retrofit and upgrade existing properties. One such example is the conversion of an old Canadian Tire location to Pickleball courts.
Large companies have been buying up tracts of land outside Ottawa for industrial usage. One large site recently completed on the city’s outskirts (Ottawa East) with easy access to the Queensway saw units scooped up in record time. New industrial developments in Kanata and Barrhaven are nearing completion and expected to see quick occupation. Cheaper land on the outskirts of town and further afield in markets including Arnprior have continued to offer development options, with quick access to transportation routes such as the 417 Corridor to Highways 16 and 17.
Retail conditions tighten in Ottawa
While retail leasing has been very strong, few significant retail sales have been recorded, as landlords hold on for greater returns. Some big box developments have come to market, including one sale pending at approximately $30 million. A few smaller retail plazas with anchor tenants in sought-after areas including Westboro have sold conditionally in multiple offers. A shortage of neighbourhood plazas under $10 million in prime locations has created increasingly competitive conditions.
Smaller retail units for lease, hovering around 700 sq. ft., remain in high demand. Restaurant franchises from the Greater Toronto Area are extending their reach into the city and actively seeking locations throughout Ottawa. Retail in the city’s downtown core has started to show improvement as return to office (RTO) mandates are implemented by government offices.
Office showing early signs of improvement
Office conversions to residential buildings common throughout the pandemic and beyond have taken close to two million sq. ft. of office space off the market. Yet, office availability edged slightly higher in Q4 2025 to 13.5 per cent according to Altus Group, compared to 13.3 per cent in Q4 2024.
The federal government’s RTO (return-to-office) mandate has begun to breathe new life into the city’s office sector in the downtown core. This year started with the sale of a 19-storey building on Slater Street for an estimated $140 million. Some companies that moved their offices to Ottawa’s outskirts during the pandemic are returning to the downtown core.
Against that backdrop, demand has begun to outpace supply in the city’s A-class buildings and to a lesser extent, class B buildings. The residential conversion at the Elgar office building prompted considerable turnover as the building’s former tenants sought out quality A-class office space within proximity to the courthouse. Two more conversions of office to residential announced at the end of 2025 are expected to continue to tighten up inventory levels.
Office space in the suburbs, including Kanata, Orleans and Barrhaven, has seen modest improvement. Class-A space in Kanata North, traditionally popular with the tech sector, has landlords offering incentives to eligible tenants.
Demand has been strongest for smaller buildings that lend themselves to conversion to medical/dental facilities. This product with retrofit potential has been extremely coveted by owner-occupiers, given favourable financing, but has remained in short supply.
Multi-residential demand holds
Multi-family residential has continued to see strong demand levels, but increasing stringency in financing has led to an increase in conditional sales. This coincides with changes to Canada Mortgage and Housing Corp. financing plans that make multi-residential product more expensive and harder for developers to access. As a result, deals have been slower to come together due to extended finance approval windows. Smaller and mid-size apartments and multi-plexes popular with younger investors and syndicates, have been in short supply, while larger complexes of 50-plus units continue to be added to REIT portfolios as soon as they become available.
Purpose-built rental developments have slowed somewhat from peak levels due to the rising cost of construction, financing difficulties, and escalating development charges. The construction of smaller apartments with 15 to 30 units has stalled. Condominium development has remained muted due to interest rates and economic uncertainty.
Capital returning, cautiously
While Ottawa’s fundamentals have remained sound, the pace of recovery is expected to be shaped by financing conditions and broader economic and geopolitical issues in 2026. While interest among foreign investors has been strengthening, with more capital expected to be redirected to Canada in the year ahead, pricing expectations and capital deployment have remained measured. Overall, conditions point to a continuation of stable market conditions, but not yet fully reaccelerating.
