It is difficult, and risky, to summarize Edmonton’s commercial real estate. It’s riskier to weigh the long-term pros and cons of making plans and investing in Edmonton’s commercial real estate. However, the encouraging and positive news is about momentum.
“Compared to two to three years ago, vacancy has declined in every category across the Edmonton office market except one,” explains Cory Wosnack, principal and managing director of Avison Young. “The downcore trophy class is the only category to see its vacancy rate climb, now at 10.8 per cent, due to an increase in the amount of available sublease space.”
Edmonton stats show that, following a strong first quarter, the Edmonton office market continues to show signs of stabilization, reporting an incredible 258,000 square feet of positive absorption in Q2 – a level of absorption that has not been seen since 2019 (with 201,000 square feet reported in Q1), and 2011 prior to that.
The recent Colliers Edmonton Office Market Report pointed out that, following three quarters of negative or flat absorption, the downtown core reported positive absorption of over 27,000 square feet. Increased transaction volume within the government and financial districts reflects improved leasing momentum within the downtown market, and the vacancy rate decreased to 19.5 per cent.
Some specific transactions that contributed to the numbers included 36,000 square feet leased by Alberta Infrastructure in Canadian Western Bank Place, and 14,000 square feet leased by CBM Lawyers in HSBC Place.
Demand for readily built out spaces with flexible lease terms remained strong, and sublease options continued to be attractive as a low-risk bridge during periods of uncertainty.
“Compared to two and three years ago, Edmonton absorption and vacancy numbers have improved,” agrees Taylor Riar, vice president, office, with Colliers. “Vacancy has dropped by just over 2 per cent, from 20 per cent to 18 per cent. This is driven by a number of factors. Since Q2 2023, we have seen just under 800,000 square feet of positive absorption, as demand has slowly increased over the past two years. Additionally, a small number of buildings were removed from the office inventory for the purposes of partial or full conversion, including 10405 Jasper Avenue and the Connect Tower.”
Tenant wants, needs, trends, landlord lease terms and more are important factors for commercial vacancy, absorption as well as investment.
Commercial real estate experts suggest some key issues that continue to impact Edmonton trends.
“Tenants are transacting with a flight-to-vibrancy mindset,” Wosnack says. “Buildings that are situated in vibrant locations are seeing more tour activity than good quality buildings in less vibrant locations. Employers recognize that their employees are more likely to work in the office more frequently if the office is located in a bustling neighbourhood that has the perception of being in safer and cleaner locations. You can design high quality office space on any floor of any building, but what matters today is the experience employees face when they are off of the floor that makes the difference.”
Riar explains that turnkey suites are also important. “Built-out space tends to lease quicker than shell, due to the rising cost of construction and capital limitations that some tenants may face when considering a move. Due to restrictions in capital, landlords who are able to provide move-in ready, turnkey suites often see higher levels of success with tenants 10,000 square feet and smaller. As decisions are delayed due to uncertainty in the market, some tenants who are unable to make decisions with enough time for construction are forced to focus their list of relocation options on space that is move-in ready.
“On the landlord side, amenitizationis a big factor. Amenities in a Class A office building in downtown Edmonton are now considered to be basic table stakes, with most Class A and higher buildings offering attractive and in-demand amenities like fitness centers, conference rooms, tenant lounges and even golf simulators.”
Commercial real estate professionals caution that macro economic uncertainty is slowing down the speed at which leasing decisions are made. “Both tenants and landlords alike are carefully considering their options and how they allocate capital,” Riar adds.
“Those who are able to make quick, calculated decisions, however, have been able to thrive in what continues to be a challenging environment for Edmonton’s office market.”
According to David Wallach, owner/broker of Barclay Street Real Estate, the locally owned full-service commercial real estate brokerage and property management firm which has been serving businesses throughout western Canada for over 40 years, two key issues that affected commercial real estate in the first half of 2025 were the federal election and tariffs.
“Many tenants and investors decided to sit on the sidelines and wait for the results of both the elections as well as the result of tariff negotiations between Canada and the US. The most important point today, for both landlords and tenants, is amenities. Whether it is re-defined workplaces, trends or economic uncertainty, Edmonton’s tenants are re-thinking their needs and expectations about space requirements and looking for office space that allows staff to work efficiently.”
There are many investment vehicles available today, and probable ROI must be a major factor in investment planning.
While commercial real estate investments provide investors with long-term reliable return on investment by investing in assets that will remain, and increase, in demand, experts suggest that properties with a high number of tenants are capable of bringing in the highest returns on investments – commercial real estate properties like multifamily projects, student housing, office space, self storage facilities and mixed-use buildings.
Investment in Edmonton commercial real estate is impacted by unique factors.
“For the past two years, we have been watching the investment market be dominated by local, private investors as the acquirers and institutional investors as the sellers,” Wosnack explains.
“This time last year, we predicted the market would turn in the latter half of 2025, which is happening now. Out-of-province investors are beginning to acquire properties, and this will lead to institutional investors returning to the market. From an ownership perspective, the market is a tale of two opposing positions. Those who purchased their office properties in the five years prior to the pandemic are seeing their asset value drop dramatically, in many cases by as much as 50 per cent.
“The other position in today’s market pertains to the investor who can pick up properties at low pricing, oftentimes from a distressed sale,” he says. “Lenders are no longer pretending and extending as they look to recoup their loans and force borrowers to sell. This presents some very attractive purchase opportunities, of which investors are taking advantage.”
Edmonton’s 2026 commercial real estate situation seems positive – but cautious.
Wosnack looks at the trends and the numbers and explains that there are two areas of Edmonton that could realistically consider developing new office space: Windermere and Summerside. With vacancy rates of 3.7 per cent and 3.2 per cent respectively, the markets in the southern quadrants of the city are the healthiest and could potentially sustain the addition of new inventory.
