Commercial real estate investment gained momentum in several Canadian markets in the first half of 2026, with industrial, retail and multi-family properties attracting capital despite economic uncertainty, elevated construction costs and financing challenges, according to a new REMAX Canada report.
The report, based on information from REMAX brokers and agents, examines market conditions in 12 major Canadian markets between Jan. 1 and June 30, comparing activity with the same period in 2025. It identifies stronger demand for established, income-producing properties and smaller commercial spaces, while high development costs continue to constrain new construction.
"Capital is flowing, but investors are trying to make every dollar count," says Kristie Kimnach, executive director of REMAX Commercial. "We've seen considerable investment in established, income-producing properties this year, particularly in markets where demand remains strong. The challenge in some of these markets seems to have been finding enough quality product to meet investor demand. Elsewhere, we are hearing that rising availability and slower absorption have put pressure on rents and values, creating a very different set of market conditions."
Industrial and retail lead improving market conditions
Industrial properties recorded improving market fundamentals in 91.6 per cent of the markets examined, or 11 of 12, according to the Fall 2026 Commercial Real Estate Report. Retail followed at 83.3 per cent, representing 10 markets, while multi-family properties showed improvement in 58.3 per cent, or seven markets.
Office properties recorded improving fundamentals in five of the 12 markets, or 41.6 per cent, while land development improved in two markets, representing 16.6 per cent. The report defines improving fundamentals as increasing absorption and decreasing availability.
In Saskatchewan, farmland listings increased significantly, while land values continued to climb, the report said.
Neighbourhood retail properties are attracting interest from grocery, medical, health, wellness, beauty and food-service operators. Demand for grocery-anchored centres and shopping plazas has contributed to retail vacancy rates below one per cent in some Greater Vancouver suburbs, where limited new construction has constrained available space.
The report also points to a shift toward smaller commercial footprints, including compact industrial and office spaces. High replacement costs are encouraging buyers to purchase and retrofit existing buildings rather than pursue new development.
Multi-family investment rises in the GTA
Multi-family properties continued to attract investor interest, although rental conditions varied across markets as new supply gave tenants more choices and put downward pressure on rents in some areas.
Investment in multi-family properties in the Greater Toronto Area rose more than 240 per cent year over year in the first half of 2026, as investors targeted established rental properties despite softer rental conditions in other markets.
Kelowna, London and Ottawa were among the markets where increased supply contributed to greater rental choice and softer rents, according to the report.
Office market conditions also varied, with demand favouring modern buildings in well-located areas. Older properties continued to face persistent vacancies and costly upgrade requirements.
Land development remained among the weaker commercial real estate segments as construction costs, financing requirements and lengthy project timelines weighed on the feasibility of new projects.
Construction costs constrain new supply
The report identifies high construction and financing costs as factors limiting the development of new commercial properties, even as demand remains strong for certain types of space.
"Supply has become increasingly constrained in some of the country's key commercial markets," says Don Kottick, president of REMAX Canada. "Demand for smaller industrial units and neighbourhood retail space has remained strong in many markets, yet high construction and financing costs continue to limit new development. Higher bond yields and economic uncertainty could prolong that imbalance, depending on local demand and development activity. If confidence improves, limited suitable space could constrain transactions in some markets; the timing and extent of any change remain uncertain."
The report also identifies defence and technology investment as emerging sources of commercial real estate demand, particularly in Halifax, Edmonton and Winnipeg.
While investment activity has strengthened in several property categories, the report highlights differences between markets, with some facing limited availability of suitable properties and others experiencing rising availability and slower absorption.
The outlook for commercial real estate transactions will depend in part on investor confidence, local demand and the pace of development, according to REMAX Canada.