The office market conversation has changed.
For several years, the dominant story was vacancy: hybrid work, federal government consolidation and companies reducing their footprints.
That is still part of the picture in Ottawa, but the more important trend in 2026 is becoming increasingly clear:
Tenants are separating good office space from everything else.
CBRE reported Ottawa office vacancy at 15.0% in Q2 2026, up from 14.3%, while Colliers reported vacancy of 13.2% using a different market methodology. Both firms noted that large blocks of space returning to the market distorted the headline numbers.
At the same time, leasing activity has remained meaningful.
Colliers reported more than 400,000 square feet of completed leasing activity in Q2, with tenants overwhelmingly favouring Class A and turnkey space.
That trend strengthened nationally in Q3.
CBRE reported that office vacancy declined in eight downtown markets, with Ottawa posting an 80-basis-point quarterly improvement in downtown vacancy. CBRE also noted that the gap between premium and lower-tier office vacancy has reached historic levels nationally, reflecting a strong preference for higher-quality buildings.
That creates two very different markets.
For tenants, there is still opportunity—but the best space is becoming more competitive.
A business looking for modern, professionally built-out office space may find that waiting for a dramatic rent reduction is not the best strategy. Landlords with high-quality product are increasingly able to defend their rents, particularly where space is already finished and can save a tenant months of construction time and significant capital.
The better negotiation may be around free rent, tenant-improvement allowances, furniture, parking, expansion rights or lease flexibility, rather than simply pushing on face rent.
For landlords with older or less competitive space, the message is different.
The market is showing that tenants are willing to pay for quality, but they are increasingly unwilling to compromise on it.
That means dated premises, poor layouts, deferred maintenance and weak amenities can create a meaningful leasing disadvantage, even where the asking rent appears competitive.
Owners may need to decide whether to:
- invest in turnkey suites;
- improve common areas and amenities;
- offer stronger inducements;
- reposition the asset toward a different tenant profile; or
- consider selling rather than continuing to compete with stronger buildings.
This is particularly relevant in Ottawa because federal workplace policy is also changing demand patterns. The federal government moved executives to five days per week in-office in May 2026, with other employees required to attend at least four days per week beginning in July. At the same time, the government has continued releasing space, creating a market where return-to-office demand and public-sector consolidation are happening simultaneously.
That is why the headline vacancy rate alone does not tell the full story.
A building can sit in a market with 13–15% vacancy and still have highly desirable space that leases quickly. Another building across the street can struggle because its product no longer matches what tenants want.
For buyers, this creates opportunity as well.
Properties with strong locations but weaker leasing performance may be attractive where there is a credible repositioning strategy. The key is understanding whether vacancy is caused by the broader market—or by something specific to the building that can actually be fixed.
The office market is becoming increasingly asset-specific.
That makes experienced representation more important for both sides of the transaction.
If you are considering leasing office space, renewing an existing lease, buying an office asset or determining whether your building should be repositioned or sold, I’d be happy to review the market with you and provide a strategy based on the current competitive set.
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