Southwestern Ontario Office Investment Forecast

Improving office needs support near-term outlook. Smaller, lower-quality inventory dominates Southwestern Ontario’s office sector, with Class B and C properties accounting for roughly 60 per cent of total space. As a result, the tenant base primarily comprises small- to medium-sized enterprises, while tech firms also occupy a notable share of space in the Waterloo submarket. Leasing activity in Southwestern Ontario is driven more by affordability, accessibility, and parking availability, unlike in larger metros, where demand is shifting toward higher-quality assets. Strong leasing momentum observed last year, which drove a 440-basis-point decline in the vacancy rate, is expected to continue in 2026, supported by the return-to-office trend and improving clarity around cross-border trade in the second half.