Ottawa office vacancy: 2024 said under 10%, CBRE says 14.9%

A forecast with a date on it

In October 2024 a panel of Ottawa landlords and analysts sat down at the Ottawa Real Estate Forum and talked about when office vacancy would come back down. The Ottawa Business Journal reported it on October 4. One panelist, Michael Swan of Morguard, gave a range and a date, which is rare and worth respecting. I am going to score it, because nobody else will.

Here is what he said. Vacancy would stay near its then level for two or three years, maybe up to 13% or down to 11%. Then, with no new office space in the pipeline, he saw it getting below 10% by 2026 to 2027. A colleague on the panel, Sachin Anand of Regional Group, put a healthy office range at 8% to 12% and called Ottawa healthy at the time.

The scoreboard

CBRE published its Ottawa office figures on October 8. Overall vacancy is 14.9%, down 10 basis points on the quarter. Net absorption was positive 28,000 square feet, the first positive quarter since Q2 2025. Class A space took in 112,000 square feet.

The like for like comparison matters, so I used CBRE on both ends. The same OBJ article has CBRE at 12.2% for Q3 2024. 14.9 minus 12.2 is 2.7 points higher in two years.

Against Swan's own range, the top of it was 13%. The actual number is 1.9 points above his worst case. Against Anand's healthy band, 14.9 minus 12 is 2.9 points over the ceiling.

Colliers tells the same story with a different inventory. It had Ottawa at 11.5% in Q3 2024. Its Q2 2026 number, which I wrote up in July, was 13.2%. That is up 1.7 points, and Colliers counts more total space than CBRE, so the levels differ but the direction does not.

Absorption flips the picture on the other side. In Q3 2024 CBRE reported negative 124,000 square feet. This quarter is positive 28,000. That is a swing of 152,000 square feet in the right direction, which is real and which I do not want to talk down.

The arithmetic on 10%

Getting from 14.9% to 10% is 4.9 points, or 490 basis points. At this quarter's pace of 10 basis points, that is 49 quarters. About twelve years.

Run it the other way. If you want under 10% by the end of 2027, there are five quarterly reports left to get there (Q4 2026 through Q4 2027). 490 divided by 5 is 98 basis points a quarter. That is roughly ten times what just happened.

One more cut. Class A absorbed 112,000 square feet and the total was 28,000, so everything that is not Class A lost about 84,000 (28,000 minus 112,000). The good space is leasing. The rest of the stock is still handing space back. That is the flight to quality showing up in the numbers, and it is why the citywide rate moves so slowly.

What held and what did not

The no new supply part of the thesis is the part I cannot score from what I read. I did not pull the construction pipeline for this post, so I will not say it held or failed.

The demand part is where it slipped. The federal government kept shedding space through 2025 and early 2026. Swan's range assumed vacancy would sit near 11% to 13%, and it overshot the top.

Credit where it is due: he said "maybe up to 13." It went past that, but his instinct that the next two years would be flat to slightly worse than 2024 was closer to the truth than the 8% to 12% healthy talk.

Re-litigating my own July call

In July I wrote that the four day return to office order, RTO4, could put a floor under Ottawa's office vacancy. Here is that post. I had CBRE at 14.3% in Q1 and said the turn could show up in the back half of 2026.

Score: partly right, and early. If Q3 is 14.9% after a 10 basis point drop, then Q2 was 15.0% (14.9 plus 0.1, which is my arithmetic, not a published figure). So vacancy kept climbing another 0.7 points in Q2 before it eased. CBRE says select federal departments report not enough room for current occupancy, and PSPC put out an expression of interest in July. No commitments have been announced. That is a signal, not a lease.

What I would do with it

If you are a tenant, the leverage is still yours outside the best buildings. The Q2 downtown vacancy post explained why the headline moves with inventory, and the additional rent post covers the part of the bill that does not show in a quoted rate.

If you own lower tier space, do not wait for a rescue. Read the conversion post before you decide, because 49 quarters is a long time to carry an empty building.

If you are buying, underwrite the building. A citywide number that moved 2.7 points in two years is a poor guide to any one building.

I am a broker, not a lawyer or an accountant. Lease clauses and tax treatment belong with your lawyer and your accountant.

What I will check next

CBRE's Q4 numbers should land around January. My bet is vacancy ends 2026 within 30 basis points of 14.9%. A bigger drop than that would mean federal leasing is showing up. I will report back either way.

Looking at an Ottawa office building, or a renewal you do not like? I would rather run your actual numbers than send you another headline. Reach me at 613-262-6545 or fil@613realtor.ca.