Amid the political intrigue in the nation’s capital, all eyes are on potential impacts for commercial real estate.
The Ottawa office market is entering a phase of greater clarity after a period of adjustment related to COVID/ remote work and interest rates. In the industrial real estate market lack of supply is putting upward pressure on rents. Several large-scale multifamily projects are slated to start or be completed this year, introducing much needed new supply. And Ottawa retailers will continue to see strong demand in 2025 as increased consumer confidence gives a boost to consumption.
We spoke to CBRE Ottawa Managing Director Maxime Foucaud about what he’s watching for in the city’s commercial real estate market this year.
Office
The Ottawa office market is entering a phase of greater clarity after a period of adjustment. The federal government’s workplace strategy, bringing back employees three days a week, will create stability for our office sector. This, along with other initiatives at the public and private level, provides a framework for what the Ottawa office market will look like in the future.
After a few years of a non-stable environment with COVID and rising interest rates behind us now, we’re mapping out the future. While vacancy may tick upward due to emerging shadow space, Ottawa remains Canada’s second-tightest office market. A flight-to-quality is driving demand for modern, amenitized spaces, particularly in Class A properties.
The federal government’s workplace strategy and the upcoming election cycle will bring clarity to its office footprint, benefiting leasing velocity and creating stability for the sector.
Industrial
The industrial market remains one of Ottawa’s best-performing asset class, with low vacancy rates and high tenant demand. Leasing demand for mid-to-large bay spaces remains strong, fueled by logistics, e-commerce, and manufacturing needs. Small bay supply continues to be tight, leaving tenants with few options in our market.
While 2025 will continue to see upward pressure on rents, supply constraints are expected to ease gradually. Developers, encouraged by the consistent demand, are expected to move forward with new developments, which will begin addressing supply shortfalls by late 2025 or early 2026.
The industrial market will remain a cornerstone of Ottawa’s real estate sector, with strong leasing activity, stable returns, and gradual relief on supply constraints.
Multifamily
Ottawa’s multi-residential sector continues to thrive on strong rental demand, driven by immigration, population growth, and affordability pressures in the homeownership market.
Despite high absorption rates for smaller units like bachelors and singles, new multifamily projects scheduled for delivery in 2025 will bring much-needed supply to a tight market. The multi-residential market will remain highly attractive to investors, offering stable returns and growth potential in a balanced market environment.
Retail
Improving economic conditions in 2025 will fuel a rise in consumer spending. Demand for quality retail space remains strong, particularly for experiential and service-oriented tenants, which continue to outperform traditional retail. Tight supply of good retail spaces has given landlords a stronger negotiating position.
Easing construction costs could allow more projects to come online and gradually cool the competitive leasing environment. High-street retail in areas like the ByWard Market and Westboro will benefit from increased tourism and rising consumer confidence.
Recent Insights
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Fraser McKenna and his team are working with Beedie, a West Coast residential and commercial developer, to sell industrial condo units at BOLT, its new development in Bolton, ON.
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The Canadian retail sector faces robust demand, low vacancy rates and limited construction activity, but CBRE’s Alistair Corbett says new developments are about to kick off in Alberta.
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CBRE Group, Inc. earlier this year combined its project management business with Turner & Townsend, a majority-owned subsidiary that provides program management, cost consultancy and project management services globally.
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