Canadian Office Vacancy Rate to Decline Through 2028, Driven by Thin Construction Pipeline

A new forecast from CoStar Group predicts that Canada's office vacancy rate will decline steadily through 2028, driven primarily by a thin construction pipeline rather than a surge in demand.

The national office vacancy rate peaked at 10.4% in the second quarter of 2025 and has since fallen to 9.8% in the second quarter of 2026, as net absorption turned positive and new deliveries slowed down. CoStar's updated forecast calls for the total vacancy rate to continue declining, reaching 9.3% by the end of 2027 and 8.7% by the end of 2028.

Rent growth for higher-end assets is forecast to reach 4%, compared with an average of about 2% for all other assets combined. The balance of risks in this forecast remains tilted to the downside, according to CoStar's chief economist Mario Lefebvre, who noted that trade and tariff uncertainty, higher fuel costs, and a declining population could further weigh on the economy.