The new head of Avison Young’s Ottawa office is “cautiously optimistic” that the National Capital Region’s commercial real estate sector will see an uptick in the second half of the year. “We’re seeing some good momentum in the market,” Jordan Lovett, who took over as managing director of the national brokerage firm’s local operations in […]
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The new head of Avison Young’s Ottawa office is “cautiously optimistic” that the National Capital Region’s commercial real estate sector will see an uptick in the second half of the year.
“We’re seeing some good momentum in the market,” Jordan Lovett, who took over as managing director of the national brokerage firm’s local operations in May, told OBJ in an interview this week. “There is more to look at right now than there might have been six to 12 months ago.”
Lovett’s remarks came the same day Avison Young released its mid-year outlook. “Hesitation is giving way to cautious momentum” in the National Capital Region, the report said, “supported by improving fundamentals and greater clarity for occupiers and investors.”
In an online survey, 44 per cent of the company’s brokers and sales representatives in Ottawa predicted sales and leasing activity will pick up in the second half of the year, with the remaining 56 per cent expecting it to stay about the same as the first six months.
After a first half that “brought a noticeable increase in buyer and investor engagement compared with 2025,” Avison Young said the Ottawa market is expected to keep gaining momentum through 2026, “so long as broader economic conditions remain relatively stable.”
Avison Young cautioned that the survey was completed before Monday’s move by U.S. President Donald Trump to introduce 50 per cent tariffs on a range of specific Canadian goods that would take effect in 30 days.
After a few sluggish years, Ottawa’s office investment market showed signs of renewed life in the first half of 2026, with a number of marquee properties, including the Carling Executive Centre and Export Development Canada’s headquarters at 150 Slater St., changing hands.
Lovett said he hasn’t heard of any other “very large” deals in the works, and expects the bulk of investment activity in the second half to consist of “smaller transactions outside of the core.”
While the report said the commercial real estate sector is showing signs of stability, it also noted that Ottawa’s recovery “has not been uniform across asset types, quality levels or locations.”
Avison Young said a “clear divide has emerged between high-quality, well-located properties and those requiring functional updates or physical repairs. Investors are becoming more selective, and lenders are applying greater scrutiny, particularly in the office sector. As some lower-quality inventory is removed from the leasing pool for conversion or repositioning, the value of quality space is being reinforced.”
With that in mind, owners of smaller, lower-tier office properties will likely continue to look for ways to reinvigorate their buildings, whether through renovations or conversions to other uses, Lovett said.
“Sellers are looking to attract a deeper, wider buyer pool,” he explained. “In their current state, (aging class-B and C buildings) are not as attractive to tenants.
“I think it’s a function of economics, really. It’s a matter of how much capital would need to be invested in order to get them up to a point where they’d be competing with some of the higher-quality product.”
When it comes to leasing, office tenants are still “looking for turnkey space in buildings that are amenity-rich,” Lovett added. “That’s what drives the market overall. Demand continues to stay high for built-out space and for show suites.”
As fall approaches, the veteran commercial real estate executive said all eyes will be on the federal government and how it deals with its four-day-a-week office mandate for most employees.
“I don’t think it’s a huge secret that the feds might need more space,” Lovett said.
Meanwhile, demand for industrial space in Ottawa “remains resilient,” the report said.
“Limited new development is underway, supported by large users and potential growth linked to major defence industry tenants and small-bay product,” it added.
“I’ve talked to a few developers on the economics of building small-bay (properties) and it just doesn’t make sense because of the type of construction and all of the partition walls and the rent that you can achieve there,” Lovett explained.
“The economics just don’t make sense. But the economics are still there for some of your larger builds, but groups are hesitant to build on spec. It’s a matter of knowing that a certain portion of the building is going to be occupied before they’re willing to kick off new construction.”
Tariffs a factor to watch
Nationally, Avison Young says the commercial real estate sector is showing signs of stability, but the new tariffs announced by the U.S. this week could be a factor to watch. And while the market is showing signs of momentum, sentiment has eased since its last forecast in December.
Nearly half of respondents across the country expect market activity to increase later this year, down from 64 per cent in December. A similar proportion believe activity will stay the same.
The firm said that sentiment has shifted from “broad optimism to a solidly balanced, steady view.” Rather than waiting for certainty amid economic turmoil, the report said, occupiers and investors are recognizing the need to act.
“Across Canada, we’re seeing markets become more actionable and decisive. Economic and geopolitical uncertainty remain, but occupiers and investors are more willing to move forward where fundamentals are strong,” said Avison Young principal and president Mark Fieder in a news release.
“The second half of 2026 is shaping up to be less about waiting for certainty and more about executing on opportunity.”
While economic and geopolitical uncertainties persist, the report said costs and tariffs have dropped to the second leading cause of project delays at 23 per cent. That’s down from 34 per cent a year ago when the firm released its 2025 mid-year report.
Risk is now the leading concern, accounting for one-quarter of developers pausing their plans.
“This suggests developers are adapting to the financial ramifications of economic and geopolitical conditions and are instead more focused on specific risks,” the firm said.
The report noted that momentum is not uniform across markets, regions or asset classes.
Sentiment in Toronto, Ottawa, Calgary and Edmonton has stabilized since the start of the year, while respondents in Vancouver and Montreal show stronger enthusiasm.
The report was based on an online survey conducted June 3-16 of 220 client-facing Avison Young representatives, such as brokers and sales representatives, and those from project management, valuations and property management teams.
— With additional reporting from The Canadian Press