Employers tighten office mandates as prime downtown space fills up and vacancy edges lower
Office workers in Canada are running out of excuses to stay home.
Major employers and the federal government are tightening return‑to‑office rules, and that shift is starting to show up in leasing activity and vacancy rates in key markets, according to the 2026 Royal LePage Commercial Real Estate Report.
Royal LePage said office and industrial real estate continue to evolve as the long-term impacts of the pandemic and global trade disruptions reshape how and where businesses operate.
Industrial activity has tapered in most markets across Canada as trade conflict and economic concerns create uncertainty, while changing workplace models and occupier expectations have intensified demand for office space – a segment that remote work drastically impacted during and after the pandemic.
Matt Jacques, interim general manager at Royal LePage Commercial, said broader economic uncertainty has weighed on commercial decisions in recent years, but heading into 2026 there is a “growing sense of stability.”
He said businesses are no longer reacting to every economic headline and are taking a more deliberate, long-term approach to space planning and investment decisions.
Return‑to‑office mandates sit at the centre of this shift.
Royal LePage reported that major employers such as Royal Bank of Canada, Rogers Communications and Starbucks Canada recalled staff to their corporate offices in 2025 and early 2026, implementing three‑, four‑ and five‑day in‑office schedules.
Federal employees will also be back in the office four days a week beginning this summer.
Jacques said in-office attendance is rising and clearer workplace strategies are bringing greater stability to the office market, even as hybrid models remain part of the equation long term.
Labour market data feed into this picture.
Royal LePage, citing Statistics Canada, said the national employment rate edged down 0.1 percentage points to 60.8 percent in January, with employment declining most in manufacturing, transportation and warehousing.
Gains showed up in arts, entertainment and recreation; agriculture; healthcare; construction; and wholesale and retail trade.
Jacques said expansion in service-oriented and support industries “points to future growth rather than contraction” and is expected to influence where and how companies lease space, reinforcing demand for flexible, well‑located office environments.
According to a Royal LePage survey of commercial real estate professionals, 66 percent of experts expect occupier demand for office space to modestly increase or stay the same in their markets in 2026, and five percent expect a significant increase.
The firm said 42 percent of experts expect office vacancy rates to decrease this year.
Regional numbers show how RTO plays out on the ground.
In the Greater Toronto Area, vacancy rates in most office asset classes declined year over year in 2025, according to Royal LePage.
Wil Irons of Royal LePage Signature Realty said the push by banks, government offices and tech companies to bring employees back more frequently has “turned the tides” in Toronto’s office leasing market.
He said demand for high‑quality downtown space has increased, with firms such as Wealthsimple, Lyft and Nvidia securing significant square footage in 2025, and that limited new supply should support the recovery of AAA and Class A buildings.
In the Greater Montreal Area, Royal LePage reported higher office vacancy in most asset classes in 2025, especially Class C, while Class A leasing continued to outperform.
Georges Renaud of Royal LePage du Quartier said Montreal’s workforce has largely operated under a hybrid model with many employees in the office three days per week, but arrangements are gradually shifting as more employers move closer to pre‑pandemic in‑person schedules.
He said competition for larger, well‑located, amenity‑rich office space is expected to remain high.
In Vancouver’s downtown core, Class A vacancy edged lower in 2025 and remained among North America’s tightest markets, while asking rents across asset classes declined.
Raman Bayanzadeh of Royal LePage Sussex said downtown landlords are offering incentives such as discounted rents and extended rent‑free periods, while tenants take a measured approach and some wait for clearer signals the market has reached its bottom.
In Ottawa, vacancy rates in lower‑class office buildings decreased year over year in 2025.
Luigi Aiello of Royal LePage Team Realty said the new four‑day in‑office requirement for federal public servants marks a significant policy shift and is likely to support modest rent growth and lower vacancy, even as the federal government works to reduce its workforce through retirements and attrition.
Royal LePage said Calgary saw vacancy rates decline across all office asset classes in 2025.
Maxine Morrison of Royal LePage Benchmark said return‑to‑office mandates are no longer the primary driver there, as companies focus on rightsizing, optimizing and designing spaces that enhance collaboration and employee engagement, with growing demand from small‑ and mid‑sized enterprises and suburban health and family‑oriented users.
