Canada’s Office Market Shows Signs of a Major Rebound

Canada’s office market is beginning to recover after years of disruption caused by the pandemic and the widespread shift to remote work.

The national office vacancy rate reached a high of 14.9% in 2025 after climbing steadily from just under 8% in early 2020. However, that trend has now started to reverse as more employers, public institutions and major organizations continue requiring staff to return to the office.

Forecasts based on economic modelling suggest the vacancy rate could fall back to around 8% by the first quarter of 2029, nearly a decade after the pandemic first reshaped workplace habits.

At the same time, in-office attendance requirements have gradually increased. Average return-to-office expectations rose from roughly 2.5 days per week in late 2022 to 3.5 days per week by the end of 2025. The share of organizations finalizing these policies also increased significantly during that period.

Large urban centres have already seen stronger leasing activity, particularly in downtown office markets. Much of this momentum has been driven by stricter return-to-office policies from financial institutions and government employers, which have contributed to several major office lease agreements over the past year.

The recovery, however, is not expected to affect all buildings equally. Premium office properties with modern amenities, strong accessibility and high-quality features continue to outperform older or lower-tier buildings. This ongoing divide, often referred to as a “flight to quality,” emerged during the pandemic and remains a defining trend in commercial real estate.

Top-tier office buildings are projected to recover to pre-pandemic vacancy levels sooner than mid-market and lower-tier properties. Analysts believe demand is already tightening for highly competitive buildings, while weaker properties may take several more years to stabilize.

Another sign of improvement is the slowing “right-sizing” trend. Early in the pandemic, many tenants sought to reduce their office footprint as remote work expanded. In 2020, nearly half of tenants reported needing less space. That figure has steadily declined, and recent surveys show only a small share of tenants still planning to shrink their offices, while a growing number are looking to expand.

Average lease sizes are also increasing again after several years of contraction, suggesting businesses are moving beyond the uncertainty that defined the pandemic years and are becoming more confident in their long-term workplace strategies.

Overall, the data points to a gradual but meaningful shift in the office market, with the sector entering a new phase of recovery after years of disruption.