Ottawa’s retail leasing market is “polarized” as downtown landlords struggle to fill empty storefronts while space remains at a premium in the suburbs, a new report says. In its Canada retail rent survey for the first half of 2026, CBRE says retail vacancies in Ottawa’s core remain high compared with cities such as Toronto, where […]
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Ottawa’s retail leasing market is “polarized” as downtown landlords struggle to fill empty storefronts while space remains at a premium in the suburbs, a new report says.
In its Canada retail rent survey for the first half of 2026, CBRE says retail vacancies in Ottawa’s core remain high compared with cities such as Toronto, where leasing is gaining momentum as workers return to the office en masse, boosting foot traffic and driving demand for restaurants and other services.
“Despite increased tenant inquiries downtown and in ByWard Market, deal activity remains in a holding pattern, with many (retailers) waiting to see if the federal government’s return-to-office strategy is successful,” says the report, which was released Thursday.
Meanwhile, retail vacancies in the suburbs are few and far between as population growth in areas like Riverside South and Barrhaven fuels demand for services such as groceries and pharmacies, CBRE says, with “large-block spaces” ranging from 10,000 to 30,000 square feet particularly sought-after.
“Completed transactions, while taking longer to finalize, are dominated by medical, entertainment, and service providers, reflecting a shift in consumer interest toward experiential and specialized uses,” the real estate brokerage says.
In an interview with OBJ on Thursday, CBRE senior Ottawa vice-president Jamie Boyce said workers still aren’t spending as much time at the office as employees in other major centres such as Toronto, and downtown merchants that rely on that traffic are feeling the pinch.
As a result, vacancy rates for prime retail real estate on Bank Street and other downtown thoroughfares have remained stubbornly high, although the tide is slowly turning, Boyce added.
“We’re starting to see more vibrancy downtown,” he said. “We’re definitely starting to see more retail interest and a handful of new stores that are opening, but it’s trailing the activity that other markets have seen and definitely a different story than what we’ve experienced (in) suburban Ottawa.”
The report says net asking rental rates in the ByWard Market have fallen to between $25 and $45 per square foot, down from a range of $30 to $50 in the previous survey six months ago. Rates in other neighbourhoods inside the Greenbelt such as the Glebe and Westboro are holding steady at between $40 and $55 per square foot.
But Boyce said he’s seen a shift in the downtown market in recent months as foot traffic ticks up in the wake of the federal government’s recent mandate for workers to be in the office four days a week.
Property owners that were offering free rent or fit-up subsidies at the start of 2026 are now finding it easier to attract tenants without dangling those carrots, he said.
“I think the landscape for deals is evolving,” Boyce said. “Landlords were willing to do highly induced deals six months ago, a year ago. I think some of those inducements are now … maybe being pulled off the table.”
Retail broker Brent Taylor agreed the downtown retail market is slowly “fighting its way back” from its post-pandemic funk.
“There are people that do have downtown on their target screens where they didn’t before,” said Taylor, who owns Brentcom Realty Corp. “It’s an improved market sentiment for downtown compared to what it was during and shortly after the pandemic. It’s definitely improving, but it’s a work in progress.”
Power centre rents rising
Hugh Gorman, CEO of property management firm Colonnade BridgePort, said Ottawa remains well behind Toronto and most other major Canadian cities when it comes to the percentage of downtown workers who come to the office every day.
Until Ottawa catches up, downtown retailers will face an uphill battle and storefronts will sit empty, Gorman added.
“We’re trailing because the government’s return to office has not been as fast as the private sector,” he said. “Retail has been particularly hard-hit. We continue to lag if you look at street-front retail and all the small business owners downtown that rely on the office population. If (retailers are) alive, they’re working hard to stay alive.”
In contrast to downtown, CBRE says asking rents in many suburban retail properties are rising as tenants seek larger blocks of space for "experiential and specialized” uses such as new forms of entertainment like those offered by Winnipeg-based Activate Games, which recently signed a long-term lease for 18,000 square feet of space at the Pinecrest Shopping Centre.
Asking net rents at power centres are now as much as $65 per square foot, up from a high of $55 at the end of 2025, the brokerage says.
While CBRE says demand for larger spaces is growing, Taylor says most suburban retailers are still looking for smaller pockets of space under 10,000 square feet.
Rents and other operating costs have soared since the pandemic, he noted, and business owners are still being cautious about spending more on real estate costs than necessary.
“The smaller the space, the quicker the snap-up,” Taylor said. “The larger the space, the more the tenant has to be sure of their business plan. Landlords seem to be patient and willing to wait to get the rent that they want.”
Boyce says large-scale vacancies remain scarce in Ottawa’s suburbs. But new inventory is on the way, with several grocery- and pharmacy-anchored retail plazas under construction or in the planning stages in Barrhaven, Riverside South and other neighbourhoods.
“We are definitely seeing more new development pipelines in the city now than we have seen for the past number of years,” he said. “A lot of that is concentrated in the south end, but there is some activity in the west end as well as in the east end of the city.
“There’s pent-up tenant demand in these markets, and there are now some good-quality land opportunities that are aligned for retail development.”
Taylor said that while he expects demand for retail space to keep growing, Canada’s escalating trade dispute with the U.S. could throw a wrench in the works.
“The tariff thing is still a cloud,” he said. “Just when things are up and coming, the tariff war … creates some uncertainty for retailers opening stores and market sentiment in general.”
Boyce said he is optimistic that Ottawa will avoid the worst fallout from the trade turmoil.
“I think the back half of this year is going to continue with positive momentum. The retail industry is seeming to weather the storm, and we’re not seeing any slowdown in appetite for expansion.”
