Commercial Building Crunch time

 

Ottawa's commercial market was very strong pre-COVID (low vacancies across classes), but office has seen the clearest and most persistent increase in vacancies due to work-from-home shifts.

 Industrial and retail have been more resilient, with vacancies rising modestly but staying low and demand-driven. These trends align with broader Canadian patterns, though Ottawa benefits from government/tech stability.

Some of you may know that occupancy in commercial business space is down, some federal governments spaces are less than 50% occupied. 

Some commercial tenants will simply not renew their leases.

What will be the consequence of this in Ottawa? Do you know? Have you asked or surveyed landlords about their business horizons?

When building owners do not have tenants, who will support their mortgage payments?
This will affect their  supporting banks adversely.

Are those buildings convertible to residential space? Do city bylaws permit the transformation?

Office Vacancy Rate

• Pre-COVID (2019): Around 7.0–7.5% overall (e.g., reports noted a 10-year low of ~7.5% in early 2019 after strong absorption; downtown/Class A often lower at ~4.7–7.7%, suburbs similar or slightly higher). Ottawa was one of Canada's tighter office markets.
• Current (late 2025): 12.3% overall (Cushman & Wakefield Q4 2025), with fluctuations earlier in 2025 (e.g., 10.8–12.7% in Q1–Q2 per CBRE/Colliers). Downtown/core submarkets often higher (13–15% in recent periods).
• Comparison: Significantly higher now — roughly 5–6 percentage points up from pre-COVID levels. This reflects ongoing hybrid work impacts, slower federal government return-to-office, and some shadow/sublet space. Ottawa remains relatively low compared to national Canadian averages (often 17–18%+) or cities like Calgary/Toronto.

Are we willfully blind about the issue of low occupancy in commercial buildings?