Southwestern Ontario Office Investment Forecast

Regional characteristics underpin performance. Southwestern Ontario’s office market strengthened in 2025, with vacancy falling sharply to 8.5 per cent. This was largely due to strong  leasing momentum, selective space withdrawals and repositioning efforts, as well as rising owner-occupier activity tightening conditions. The improvement also reflected the region’s structural advantages over larger metros — more affordable parking, shorter commute times and a tenant base dominated by smaller firms with greater control over their return-to-office strategies. Amid a limited new-supply pipeline, these factors, along with competitive rents, helped improve office demand despite widespread tariff uncertainty. Looking ahead, 2026 is expected to continue this trend. While trade negotiations could still sour — which does pose a material risk to the metro’s office outlook — greater policy clarity is likely to emerge. This, along with continued return-to-office momentum, is likely to support tenant demand. Meanwhile, older buildings are expected to attract growing investor attention for adaptive reuse and conversion opportunities, positioning Southwestern Ontario as a more balanced office market heading into the next cycle.