Alberta’s commercial real estate market is changing, but the story is more complicated than a simple downtown recovery.

Calgary and Edmonton both showed improving office-market fundamentals during the first half of 2026. Sublease space declined, tenants continued moving toward higher-quality buildings, and both cities recorded positive downtown absorption during the second quarter.

At the same time, vacancy remains high—particularly in downtown Calgary.

The strongest part of Alberta commercial real estate is also not necessarily the downtown office sector. Industrial properties around both major cities continue to show much tighter supply conditions.

For businesses, property owners and anyone following Alberta’s economy, that creates three different stories:

Calgary is removing surplus office space. Edmonton is gradually absorbing it. Industrial markets remain comparatively tight.

Calgary Downtown Is Improving, but Vacancy Is Still High

Calgary’s downtown office market recorded its first quarter of positive net absorption since Q4 2024 during the second quarter of 2026.

According to CBRE, approximately 115,000 square feet of additional downtown office space was absorbed during Q2.

Downtown vacancy also declined by 30 basis points.

But the overall vacancy rate was still:

29.2%

at the end of the quarter.

That distinction is important.

A falling vacancy rate does not mean Calgary suddenly has a tight office market.

Nearly three out of every ten square feet in CBRE’s downtown inventory remained vacant.

The better description is:

Calgary’s downtown office market is improving from a very high-vacancy starting point.

Calgary’s Office Numbers in Q2 2026

CBRE reported the following downtown figures:

Calgary Downtown Office	Q2 2026
Vacancy rate	29.2%
Quarterly net absorption	~115,000 sq. ft.
Sublease vacancy	~2.28 million sq. ft.
Net asking rent	$17.87/sq. ft.
Total downtown inventory	~41.5 million sq. ft.

The positive absorption was meaningful because Calgary had not posted a positive downtown quarter since late 2024.

But 2.28 million square feet of sublease vacancy remains substantial.

That means businesses searching for office space may still find considerable choice, particularly outside the most desirable buildings.

The Biggest Calgary Trend Is “Flight to Quality”

Not all Calgary offices are recovering equally.

One of the clearest trends in 2026 is a flight to quality.

Companies increasingly prefer buildings with:

• newer interiors
• modern HVAC and building systems
• stronger amenities
• better transit access
• upgraded common areas
• attractive spaces that support employees returning to the office

CBRE reported that Calgary’s Class AA segment recorded approximately 207,000 square feet of positive net absorption during the first half of 2026.

By contrast, the other building classes collectively experienced negative absorption during that period.

So the market is not simply:

Companies are leasing more Calgary offices.

It is closer to:

Companies that need office space are increasingly concentrating in the best buildings.

That difference matters enormously for property owners.

Two office towers located only a few blocks apart can therefore experience very different leasing conditions.

Energy Still Matters to Calgary’s Office Market

Technology and other industries contribute to economic diversification, but energy companies remain extremely important to Calgary’s downtown office market.

CBRE specifically identified energy-sector mergers and acquisitions as a continuing risk to office demand.

When two large energy companies combine, overlapping departments can eventually require less office space, which may return floors to the sublease market.

CBRE highlighted energy-industry consolidation as one of the variables that could affect Calgary’s downtown vacancy in 2026.

This means diversification helps, but Calgary’s commercial property market is still meaningfully connected to the structure of Alberta’s energy industry.

For a broader look at Alberta’s changing technology economy, see:

Alberta’s Growing Tech and AI Economy in 2026: Why Edmonton and Calgary Matter Beyond Energy

Office Conversions Are Changing Calgary’s Supply

Calgary’s most distinctive commercial real estate policy is its downtown office conversion program.

Instead of waiting for enough new companies to lease every vacant tower, the city has been financially supporting the removal of obsolete office space from the market.

The program can help convert underused offices into:

• apartments
• hotels
• student housing
• seniors housing
• co-living developments
• educational space
• life-science uses
• cultural uses

The City of Calgary says its current conversion pipeline includes 21 projects covering approximately 2.68 million square feet of office space.

Those projects are associated with approximately 2,667 new homes, plus hotel and hostel space.

That is an important distinction from ordinary leasing recovery.

If a vacant office building becomes apartments, that space disappears from office inventory entirely.

Vacancy can therefore decline because:

more tenants lease offices

and/or because

some obsolete offices stop being offices.

Both forces are operating in Calgary.

Calgary Wants to Remove Even More Surplus Office Space

Calgary’s longer-term target is much larger.

The city says its downtown incentive programs are intended to remove approximately 6 million square feet of underused office space by 2031.

The program was updated and reopened during 2026, with $25 million allocated for the latest application round and incentives of up to $75 per square foot for eligible projects.

That makes office conversion more than a temporary experiment.

It has become a central component of Calgary’s downtown redevelopment strategy.

Why Office Conversion Can Help Beyond the Vacancy Rate

Turning old offices into housing does more than reduce the denominator in an office-vacancy calculation.

More downtown residents can potentially support:

• restaurants
• grocery stores
• personal services
• entertainment
• transit ridership
• street-level retail

This is one reason office conversion is closely connected to downtown revitalization.

But conversions also have limitations.

Not every office tower is suitable for residential use.

Floor depth, plumbing, windows, elevators, structural configuration and construction costs can make some buildings expensive or impractical to convert.

That is why Calgary’s strategy also includes incentives for other uses and, in some circumstances, demolition of obsolete office buildings.

Edmonton’s Downtown Office Market Looks Different

Edmonton also showed improvement in Q2 2026, but its market starts from a different position.

CBRE reported downtown Edmonton office vacancy of:

20.7%

in the second quarter.

That was down 50 basis points from the previous quarter and represented Edmonton’s lowest downtown vacancy rate since Q3 2021.

Downtown Edmonton also recorded approximately 81,000 square feet of positive net absorption during the quarter.

That is a healthier direction.

But a 20.7% vacancy rate still means more than one-fifth of the downtown office inventory measured by CBRE remained vacant.

So Edmonton’s market should also be described as improving, rather than fully normalized.

Edmonton’s Sublease Market Changed Dramatically

One of Edmonton’s most notable 2026 developments was the collapse in downtown sublease availability.

CBRE reported that downtown sublet space had declined for five consecutive quarters.

In Q2 alone, downtown sublease availability fell 55.7%.

Only about 97,000 square feet remained available for sublease—the first time the figure had fallen below 100,000 square feet since Q4 2012.

That matters because sublease space often offers tenants relatively inexpensive, already-built offices.

When those options disappear, companies looking for space may increasingly have to negotiate directly with landlords.

Edmonton Is Also Experiencing a Flight to Quality

Like Calgary, Edmonton’s strongest office performance is concentrated in better buildings.

In the Financial submarket during Q2:

• Class AA vacancy fell 180 basis points
• Class A vacancy fell 90 basis points

At the same time, Class B vacancy increased.

CBRE attributes part of this trend to businesses seeking modern, amenity-rich and already built-out space, particularly as high construction costs make major tenant improvements more expensive.

That creates a commercial real estate market with clear winners and losers.

A downtown vacancy rate alone does not tell investors or business operators whether a specific building is performing well.

Building quality increasingly matters.

Calgary vs. Edmonton: The Office Picture

The two downtown markets can be summarized this way:

Q2 2026	Calgary	Edmonton
Downtown vacancy	29.2%	20.7%
Quarterly net absorption	~115,000 sq. ft.	~81,000 sq. ft.
Major trend	Conversions + flight to quality	Sublease absorption + flight to quality
Key remaining issue	Very high overall vacancy	Elevated vacancy despite improvement

The numbers come from CBRE’s Q2 2026 market reports.

This comparison also shows why it would be misleading to describe “Alberta office real estate” as a single uniform market.

Industrial Real Estate Is Much Tighter Than Downtown Office

In reality, the industrial sector is one of the strongest contrasts with Alberta’s office market.

Edmonton’s industrial vacancy has remained below 3% for seven consecutive quarters.

In Q2 2026, the market recorded approximately 538,000 square feet of positive net absorption, while overall availability fell to 4.5%—its lowest level in more than a decade.

That is a radically different supply-demand environment from downtown offices.

Edmonton Industrial Supply Remains Constrained

Edmonton’s industrial market has benefited from demand across:

• warehousing
• manufacturing
• transportation
• distribution
• energy-service businesses
• construction and trade-related operations

The precise drivers vary by submarket.

But CBRE’s Q2 numbers show that available space remains limited.

Seven speculative projects totalling approximately 880,000 square feet were scheduled for completion by the end of 2026, providing some new supply.

With vacancy still below 3%, however, Edmonton industrial conditions remain substantially tighter than Edmonton’s office market.

Calgary Industrial Development Is Also Active

Calgary’s industrial market tells a somewhat different story.

During Q2 2026, approximately 429,000 square feet of new industrial space was delivered—and CBRE reported that 89% was already pre-leased.

Construction activity also expanded for a fourth consecutive quarter, reaching approximately 4.8 million square feet under construction.

That suggests developers are responding more actively to industrial demand than they are to traditional downtown office demand.

Calgary’s location also makes it an important Western Canadian distribution centre, with road and rail links connecting Alberta to British Columbia, Saskatchewan and U.S. markets.

Do Tech Companies Explain the Downtown Recovery?

Alberta’s technology economy is growing, and tech firms do occupy office space.

But available 2026 commercial real estate data point to several simultaneous drivers:

• return-to-office requirements
• declining sublease availability
• premium-building demand
• office conversions
• energy-sector leasing activity
• professional-services tenants
• removal of obsolete buildings from office inventory

Nationally, CBRE reported four consecutive quarters of positive office absorption by Q2 2026—the first time that had occurred in six years.

So Alberta’s recovery is part of a broader Canadian office-market improvement, not solely a local tech-sector story.

Hybrid Work Has Not Eliminated Offices

Another useful lesson from 2026 is that hybrid work has not made offices irrelevant.

Instead, it has changed what kind of office tenants want.

A company that allows employees to work remotely several days a week may need less total space.

But when employees do come in, businesses may prefer:

• better locations
• collaborative areas
• modern meeting rooms
• fitness facilities
• food amenities
• high-quality common areas
• turnkey interiors

This helps explain why the best buildings can improve even while older offices remain heavily vacant.

In commercial real estate terminology, that is the flight-to-quality effect seen in both Calgary and Edmonton.

Does Alberta Commercial Real Estate Offer Lower Prices Than Toronto or Vancouver?

Alberta is often described as a lower-cost commercial real estate market than Toronto or Vancouver, but direct comparisons require caution.

There is no single “commercial property price.” Office towers, industrial warehouses, retail centres and development land are valued differently, and prices vary significantly by location, building quality, rental income, vacancy and lease structure.

A lower acquisition price also does not automatically mean a property offers better investment value. Differences in rent, financing costs, expected growth and market risk all affect valuation.

Property values also depend on:

• rental income
• vacancy
• lease terms
• tenant quality
• capitalization rates
• financing costs
• building condition
• location

It is therefore not useful to say Alberta is automatically a “better-value investment” than Toronto or Vancouver.

A lower purchase price can simply reflect different expected rent, risk or growth.

What Businesses Looking for Office Space Should Watch

For businesses considering Calgary or Edmonton, the headline vacancy rate is only the starting point.

A tenant should also consider:

• building quality
• effective rent after incentives
• operating costs
• parking
• transit access
• tenant-improvement costs
• available turnkey space
• lease flexibility
• sublease availability

The disappearance of inexpensive sublease options in Edmonton is particularly relevant in 2026.

Meanwhile, Calgary’s high overall vacancy may still give tenants substantial negotiating options outside the most sought-after Class AA buildings.

What Property Owners Should Watch

For landlords, the gap between high-quality and obsolete properties may be more important than the citywide vacancy rate.

An older office building may require significant capital to compete with upgraded towers.

Owners therefore face several possible strategies:

renovate, reposition, convert, change use, demolish or continue competing as traditional office space.

Calgary’s conversion program makes some alternatives financially easier, but conversion feasibility still depends heavily on the individual building.

How This Fits Alberta’s Broader Economy

Commercial real estate reflects what’s happening in the wider provincial economy.

Energy remains important, particularly to Calgary.

Technology and professional services are expanding.

Population growth creates demand for housing and services.

Warehousing, logistics and industrial uses support trade and distribution.

And downtown governments are increasingly trying to replace single-purpose office districts with mixed residential, commercial and entertainment neighbourhoods.

For broader Alberta economic context, see:

Moving to Alberta in 2026: Jobs, Housing, Taxes & Cost of Living Reality

and:

Alberta Cost of Living 2026: Rent, Utilities, Groceries, Transportation & Insurance

Frequently Asked Questions

Is Calgary’s downtown office market recovering?

There are signs of improvement.

Calgary recorded approximately 115,000 square feet of positive downtown net absorption in Q2 2026, its first positive quarter since Q4 2024.

However, downtown vacancy remained very high at 29.2%, so the market cannot yet be described as tight.

What is Edmonton’s downtown office vacancy rate in 2026?

CBRE reported a 20.7% downtown vacancy rate in Q2 2026, the lowest since Q3 2021.

Which city has the higher downtown office vacancy rate?

Using CBRE’s Q2 2026 figures, Calgary was at 29.2% and Edmonton at 20.7%.

Are Calgary office conversions actually significant?

Yes.

The City of Calgary says its conversion pipeline includes 21 projects representing about 2.68 million square feet of office space and 2,667 residential units, along with hotel and hostel development.

Is the City trying to convert every empty Calgary office?

No.

The long-term program target is to remove roughly 6 million square feet of underused office space by 2031 through conversions and other redevelopment approaches.

Not every vacant building is technically or financially suitable for residential conversion.

Is Edmonton also improving?

Yes, according to Q2 2026 leasing data.

Downtown Edmonton recorded around 81,000 square feet of positive absorption and vacancy fell 50 basis points during the quarter.

Its downtown sublease inventory also dropped to approximately 97,000 square feet.

Is Alberta industrial real estate stronger than office real estate?

Current vacancy data suggest much tighter conditions in industrial markets.

Edmonton industrial vacancy has remained below 3% for seven consecutive quarters, while downtown office vacancy was 20.7%.

The property types serve different users, so they should not be treated as directly interchangeable investments.

Are tech companies responsible for falling office vacancy?

They may contribute to leasing demand, but 2026 data do not support attributing the entire recovery to technology companies.

Conversions, return-to-office trends, professional services, energy companies and shrinking sublease inventories are also important.

Conclusion

Alberta commercial real estate in 2026 is not experiencing one uniform recovery.

Calgary downtown office vacancy remains high at 29.2%, but positive absorption, premium-building demand and aggressive office conversions are gradually changing the market.

Edmonton downtown vacancy has improved to 20.7%, while sublease availability has fallen to levels not seen in more than a decade.

Meanwhile, industrial property around both cities is operating under much tighter supply conditions than downtown office space.

The most important 2026 trend is therefore not simply “commercial real estate is recovering.”

It is that Alberta’s commercial property market is becoming increasingly segmented:

high-quality offices are outperforming older buildings, obsolete Calgary offices are being removed from inventory, and industrial space remains comparatively scarce.

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Disclaimer: This article provides general economic and commercial real estate information. Vacancy, rents, property values and development plans can change, and this article is not individualized investment or real estate advice.