Avison Young's mid-year survey finds investor sentiment at its strongest point since 2025, with quality assets driving capital deployment
Canadian commercial real estate is entering a new phase defined less by caution and more by decisive action, according to Avison Young's 2026 Canadian Mid-Year Outlook.
The recently released survey, drawn from more than 200 of the firm's Canadian real estate professionals, found that 96 per cent expect market activity to increase or hold steady through the second half of the year, the most constructive reading the firm has recorded since mid-2025.
While the share of respondents forecasting increased activity eased from 64 per cent in Avison Young's annual outlook to 49 per cent at mid-year, the firm notes that confidence has nonetheless improved year-over-year. At mid-year 2025, 45 per cent of respondents anticipated stronger activity — four percentage points fewer than today.
It suggests the market has moved past a period of suspended decision-making and into one where fundamentals — rather than external shocks — are increasingly driving allocation choices.
Quality as the central investment thesis
The report identifies asset quality as the clearest differentiator in the current environment. High-quality, value-add premises are attracting the most attention from both occupiers and investors, while secondary assets continue to face headwinds.
Interest rate and financing conditions remain important variables. Borrowing costs have moderated from their 2023–2024 peak, and while the Bank of Canada's rate path remains a consideration for leveraged buyers, Avison Young's respondents suggest the focus has shifted toward asset-specific fundamentals rather than macro rate anxiety.
Mark Fieder, Principal and President of Avison Young Canada, based in Toronto, described the mood as one of growing pragmatism. "Across Canada, we're seeing markets become more actionable and decisive," Fieder said. "Economic and geopolitical uncertainty remain, but occupiers and investors are more willing to move forward where fundamentals are strong. The second half of 2026 is shaping up to be less about waiting for certainty and more about executing on opportunity."
Regional divergence adds complexity
The outlook reveals meaningful variation across Canadian markets, a factor advisors with exposure to real estate investment trusts (REITs), private real estate funds, or direct property holdings will need to consider. Sentiment in Toronto, Ottawa, Calgary, and Edmonton has stabilised since the start of 2026, while Vancouver and Montréal are showing notably stronger enthusiasm.
This regional divergence reflects differing local economic drivers: Alberta's energy-linked growth, British Columbia's constrained supply environment, and Québec's evolving office and industrial base each create distinct risk and return profiles.
Tariffs and risk: the recalibration underway
Perhaps the most telling finding in the mid-year outlook concerns shifting developer priorities. In prior editions of the survey, construction costs and tariffs ranked as the primary sources of concern for project delays.
In the July 2026 edition, risk considerations took the top spot at 25 per cent of respondents — up from 15 per cent — while costs and tariffs dropped to second place, declining nine percentage points since the annual outlook and 11 points year-over-year.
Avison Young characterises this as a sign of adaptation: developers have largely absorbed the financial implications of economic and geopolitical disruption and are now applying more granular risk analysis to individual projects rather than treating macro conditions as a blanket barrier to development.
That said, the report flagged a US administration announcement on tariffs made in the same week as a "must watch" development — a reminder that the external environment remains fluid. Wealth managers advising clients on commercial real estate exposure will want to monitor trade policy developments, particularly as they affect construction pipelines and development timelines in border-adjacent markets.
Marie-France Benoit, Principal and Director of Market Intelligence at Avison Young Canada, in Toronto, noted that the firm expanded its survey methodology this year to include valuation and property management professionals alongside its traditional brokerage cohort. "By incorporating a wider view across service lines, Avison Young can share a truly holistic, comprehensive snapshot of the commercial real estate landscape," Benoit said. "This gives us key, measurable insights that strategically navigate clients through their critical business and real estate decisions."
