Alberta eyes a brighter future for commercial real estate
Overall, the sentiment is positive not only in Alberta but throughout Canada, as revealed in our 2026 Canada Outlook survey, a measure of Avison Young experts’ views, where a resounding 97 per cent expect stable (33 per cent) or increased (64 per cent) activity this year compared to mid-year 2025. This expectation carries through to Alberta: in Calgary, 93 per cent of survey respondents expect market activity to hold steady or increase, and in Edmonton, 95 per cent expect activity to remain at or above current levels.
A key driver for success in Alberta is the strength of inter-provincial migration, as we continue to welcome more new residents to cities across the province, and particularly to Edmonton and Calgary. Another driver for Calgary is anticipated GDP growth for 2026 of nearly 2.5 per cent, almost double the national average of 1.3 per cent. Although we see clear skies for the industrial and multi-family sectors, challenges persist in Calgary’s downtown office market due to energy sector consolidation and increasing large-block vacancies and sublease space. Meanwhile, in Edmonton, bright spots include the resilience of the retail sector as well as the education sector’s contribution to downtown vibrancy by picking up vacated office space. Generous office incentives are boosting Edmonton’s leasing market, creating favourable terms for clients.
With the continued flight to quality in Alberta’s office market and across Canada, occupiers are being more strategic and intentional about the spaces they occupy. With less availability anticipated in 2026 in trophy and Class A premises, availability in Class B and C will create opportunities. In Calgary, interest and activity remain in office-to-residential conversions of underutilized properties through the municipality’s incentivization program – an initiative that will continue to positively contribute to downtown vibrancy and to lowering office vacancy metrics. Overall, in both Calgary and Edmonton, owners and occupiers will continue to demonstrate business confidence as markets tighten. The bid-ask gap persists, but the worst is behind and rents will further stabilize.
Canadian industrial real estate remains a cornerstone of growth. Net absorption across Canada tripled year-over-year, signalling strong demand as tenants leased more space than they vacated. Class A assets are expected to outperform in 2026, while older properties face functional obsolescence.
In Calgary, industrial is a standout with growth in manufacturing, distribution and logistics driving demand for modern facilities. Strong absorption and declining vacancy exist across major sub-markets. Large-format development will likely remain subdued in Calgary, and serviced land constraints will keep modern supply tight. Sublease listings are expected to pressure sublease rates, offering leverage to large occupiers. Now is an ideal time to secure industrial assets or expand operational footprints in Calgary.
Similarly, Edmonton’s industrial sector is experiencing positive absorption and strong demand, with vacancy trending lower due to limited new supply. Speculative builds are favoured for 2026, with small/mid-bay development paused unless rents rise significantly. Despite some concern around rising construction costs, Edmonton’s industrial real estate market is expected to see higher activity to bolster cautious optimism this year.
While institutional investors are active, in Edmonton we note a specific appetite for private capital, particularly among local, home-grown investors. Private investors are increasingly focused on niche, value-add opportunities – a theme for 2026. Foreign investment is anticipated to remain muted, constrained by deal size and pricing uncertainty.
Bank of Canada (BoC) announcements remain critical. Around mid-year 2025, our industry forecasted further interest rate cuts to unlock more investment opportunities among buyers – however, it appears the BoC may now pause on rates for most if not all of 2026. This could prevent some commercial investors from entering the market as they lengthen their cautious wait time on the sidelines.
Other headwinds include elevated construction costs for new development and for improvements to existing space, uncertainty around tariffs, and tightening supply that will further constrict in 2027. These headwinds are leading to deals taking longer to close, with decision-making extended due to softness over the last 18 months. However, should factors around inflation and employment rates remain positive to neutral, there’s tremendous opportunity for markets to continue their active recoveries.
www.westerninvestor.com/british-columbia/alberta-eyes-a-brighter-future-for-commercial-real-estate-11926596
