Vacancy reality
After years of cheap capital, higher rates and hybrid work have altered property economics. Office vacancy hit 19.6 percent nationally—record highs in Calgary (32 %), Toronto (19 %), Vancouver (14 %).
| Segment | National Vacancy % (Q2 2025) | Rent Change y/y | Source |
|---|---|---|---|
| Office | 19.6 | –7 % | CBRE Market Outlook 2025 |
| Industrial | 3.2 | +6 % | CBRE |
| Retail | 5.1 | +1 % | Retail Council of Canada |
Shifts to watch
- Repurposing surge: ~8 million sq ft of office slated for residential conversion.
- Debt maturities: $65 billion in CRE loans roll by 2026 amid higher refinancing costs.
- Logistics resilience: industrial space demand up 14 % since 2019.
What leaders can do
- Reassess portfolio mix. Prioritize logistics and multi-use assets.
- Negotiate energy retrofits. ESG compliance can add 3–5 % valuation premium.
- Adopt prop-tech analytics to track tenant utilization.
- Hedge interest exposure via longer-duration instruments.
Arcus Insight: The property cycle is becoming a productivity cycle—returns will hinge on adaptive reuse and operational intelligence, not leverage.