Widespread return-to-work mandates are sparking “renewed demand” for office space in major Canadian cities, a new report indicates.

The report, released by Royal LePage on Thursday, indicates 2026 will be a year of revival for office real estate, which was impacted heavily during the COVID-19 pandemic that drove many employees to full-time remote work.

However, the report states that the dynamic is shifting, given major employers such as Royal Bank of Canada, Rogers Communications and Starbucks Canada have recalled staff to their corporate offices in 2025 and early 2026, implementing in-office work schedules of three, four and five days.

Federal employees will also be back in the office four days per week, beginning this summer.

“Employers are placing greater emphasis on how space can be used rather than how much space they take up, prioritizing layouts that support collaboration, flexibility and employee experience. That shift is increasingly shaping leasing decisions across the country,” said Matt Jacques, interim general manager of Royal LePage Commercial, in a news release.

“While hybrid work models will remain part of the equation long-term, rising in-office attendance and clearer workplace strategies are helping to bring greater stability to the market.”

Across the country, the office real estate sector is advancing at different speeds, the report showed.

Some major centres, such as the Greater Toronto Area, are beginning to see renewed momentum, while others, including downtown Vancouver and Calgary, continue to lag or have already largely completed their transition back to in-person work environments.

In the GTA, major companies like Wealthsimple, Lyft and Nvidia secured significant square footage in 2025, the report said.

Companies are prioritizing environments that support worker collaboration, offer proximity to Union Station and provide access to desirable amenities. Office spaces that lack these are likely to face ongoing softness.

In Montreal, competition for larger, well-located and amenity-rich office space will be high, keeping pressure on the upper end of the market, the report showed.

Vancouver’s downtown office rental market has remained soft in the post-pandemic period, with the greatest pressure on larger office buildings as companies reduce their footprints and continue using hybrid working models.

“As a result, downtown landlords are increasingly offering incentives such as discounted rental rates and extended rent-free periods to attract tenants. In contrast, office markets outside the city core have seen more stable growth in rental rates,” said Raman Bayanzadeh, principal of the CRE investment and development team with Royal LePage Sussex.

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“The silver lining is that current market conditions present a compelling opportunity for office tenants to secure high-quality space in desirable buildings. Many tenants are being selective and taking a measured approach, with more price-sensitive users waiting for clearer signals that the market has reached its bottom before committing.”

Softness in Ottawa’s market will persist, but only in the short term, as federal public servants will be back in office come July, the report stated. However, the federal government’s commitment to reducing the size of the public service is expected to temper the pace of office recovery.

In Calgary, companies are focusing on rightsizing, optimizing and designing spaces that enhance collaboration and employee engagement, rather than a straightforward return-to-office mandate.

“This shift is evident in the increasing demand for premium, productivity-focused spaces, alongside the repurposing of older office inventory.  … At the same time, restrictive parking and accessibility challenges downtown are pushing some office tenants to look outside the city core, placing pressure on suburban vacancies,” said Maxine Morrison, executive vice-president and real estate advisor with Royal LePage Benchmark.

“Small businesses in particular are seeking space that allows them to grow their teams and strengthen company culture, while employees are increasingly valuing visibility to management and opportunities to collaborate in person.”

Calgary’s geographic advantages — particularly its proximity to the U.S. border — are expected to give it a competitive edge over Edmonton, the report added.

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