Office remains the softest major asset class, but leasing is more active in better-quality buildings and conversions are reducing obsolete downtown inventory.

Industrial and retail are the clearest landlord-favourable segments, supported by limited availability, population growth and Calgary's relative cost advantage. Hotel fundamentals are normalizing from the post-pandemic recovery cycle, while medical/healthcare space continues to benefit from outpatient, diagnostics and population-driven demand.

Macro conditions are supportive but not risk-free. Calgary Economic Development reported that Calgary continues to lead Canada in job growth, while the City of Calgary projects 2.4% local economic growth in 2026 and population growth near 2%. This should support demand for industrial, retail, medical and hospitality, though unemployment and global trade/energy risk remain watch items. The Bank of Canada held its overnight target at 2.25% in late April 2026, giving investors more stability than the 2022-2024 rate shock period, but not yet a full return to cheap capital. [7,8]

Q1 2026 market dashboard

Source: Precedent Developments analysis of Colliers, Barclay Street, CBRE Hotels, PwC/ULI, Calgary Economic Development, Bank of Canada and Altus Group sources. See source notes.

Macro and capital market context

Calgary's 2026 backdrop is one of moderated but still positive growth. The city's growth profile remains above Canada-wide expectations, but rapid population gains have also kept the unemployment rate elevated as labour-market absorption lags demographic growth. For commercial real estate, this mix favours categories linked to household formation, logistics, value-oriented investment and essential services, while office demand remains more tied to energy-sector consolidations and return-to-office behaviour. [7]

Financing conditions have stabilized compared with the peak of the tightening cycle. A 2.25% overnight target is materially below the 2023-2024 highs and supports more predictable underwriting. Still, capital markets remain sensitive to inflation, tariffs, energy prices and global geopolitical risk. Investors should stress test exit cap rates and renewal assumptions rather than relying solely on rate compression. [8]

For developers, cost certainty remains the central feasibility constraint. The 2026 construction outlook notes that material costs were volatile through 2025, skilled trades shortages continue to pressure wages and schedules, and tariff/geopolitical risks can change baseline pricing. This points to conservative contingencies, early procurement and pre-leasing discipline. [9]

Multi-family market

Calgary multi-family is the first category in this report because rental housing, apartment investment and office-to-residential conversions are central to the city's 2026 development narrative.

Calgary's purpose-built rental market entered 2026 with healthy underlying demand but clear supply-driven softness. Marcus & Millichap characterized the market as one where new supply is resetting the rental landscape, with continued in-migration supporting absorption in older and more affordable stock while elevated deliveries push overall vacancy into the high-5% range. [S0]

The multi-family read-through is not uniformly negative. Legacy and value-oriented rental assets remain comparatively resilient, while higher-rent new product and larger projects are taking longer to stabilize. For developers, the key feasibility question has shifted from whether demand exists to whether the project can compete at the right rent, cost basis, amenity level and delivery window. [S0]

Ownership-market data adds a cautionary signal for higher-density product: CREA / CREB reported that Calgary residential sales in Q1 2026 were down 11.3% year-over-year overall, with apartment-unit sales down 24.6%. While MLS condominium activity is not the same as purpose-built rental investment, it reinforces the need to separate renter-demand fundamentals from for-sale absorption risk. [S0B]

Figure 2. Multi-family indicators combine purpose-built rental vacancy commentary with high-density ownership-market context. Metrics are directional and should not be compared as one unified dataset. [S0][S0B]

Office market

Q1 reinforced a two-speed office market: downtown vacancy remains elevated, but leasing activity, suburban demand and quality-driven relocations point to a more nuanced recovery.

Colliers reported approximately 184,000 sf of negative downtown net absorption and a 92 bps increase in overall vacancy to 28.09%. The increase was driven primarily by sublease additions in the AA market, including 141,000 sf at Eau Claire Tower following Cenovus Energy's acquisition of MEG Energy, and expected sublease space at Eight Avenue Place as ATB consolidates into Suncor Energy Centre. [1]

The market is not uniformly weak. Class AA vacancy at 18.63% is materially below the overall downtown rate, while Class A, B and C vacancies remain above 31%. This underscores a classic flight-to-quality pattern: occupiers are using the market to upgrade buildings, consolidate space and seek move-in-ready suites that reduce fitout complexity. [1]

Office-to-residential and alternative-use conversions remain essential to the downtown thesis. Colliers reported that more than 3.2 million sf of underutilized office space has been removed from inventory since 2021, while CBRE noted that Calgary has the largest office-conversion pipeline among Canadian cities, with 29 conversion projects totaling approximately 3.2 million sf. [1,8]

Source: Colliers Calgary Downtown Office Market Report Q1 2026.

Q1 2026 downtown office statistics by class. Source: Colliers.

Industrial market

Industrial remains Calgary’s tightest major CRE sector, supported by logistics, small-bay demand, business growth and relatively low availability across functional product.

Colliers reported 745,718 sf of positive net absorption in Q1 2026 and a 27 bps decline in vacancy to 3.25%. Demand was concentrated in the Southeast and Balzac, supported by distribution, storage, pre-leasing and large users seeking modern space. [2]

The development pipeline is active but disciplined. Colliers identified 3.97 million sf under construction, with 75.8% concentrated in Balzac. Speculative development is returning, but 35% of the approximately 1.17 million sf speculative component was already pre-leased and another 54,000 sf was under conditional agreement. [2]

Investment liquidity is improving. Colliers noted that Calgary industrial investment sales reached approximately $450 million in 2025 and that firm/under-contract transactions by the end of Q1 2026 had already surpassed that full-year figure. Calgary's discount to Vancouver and Toronto, plus rental-rate appreciation, is drawing both private and institutional capital. [2]

Source: Colliers Calgary Industrial Market Report Q1 2026.

GCA industrial submarket statistics. Source: Colliers.

Retail Market

Calgary retail begins 2026 below equilibrium: demand is broad, space is scarce, and the central challenge is lack of suitable availability rather than lack of tenant interest.

Retail is Calgary's tightest broad commercial segment. Barclay Street reported 97.1% overall occupancy, 2.9% head lease vacancy and 3.1% overall availability at Q1 2026. Head lease vacancy has declined from 4.0% at the beginning of 2025 to 3.4% at 2025 year-end and now 2.9%, a 110 bps reduction. [3]

Demand is strongest for QSR, service uses, child care, street-front premises, community centres and larger-format boxes. The problem is less demand creation than a shortage of suitable availability. Approximately 160,000 sf was absorbed in Q1 2026, with notable tightening in community shopping centres and southwest suburban retail. [3]

Retail development is likely to follow population growth and suburban expansion. Calgary's CBD and Beltline still carry the highest retail vacancy at 7.5% and 7.3%, respectively, but both improved modestly during Q1. Suburban NE, NW and SE locations remain exceptionally tight, with reported vacancy of 1.9% to 2.3%. [3]

Source: Barclay Street Real Estate, Q1 2026 retail landscape.

Retail area data. Source: Barclay Street Real Estate.

Hotel market

Calgary hotel fundamentals remain well above early-cycle recovery levels, but 2026 underwriting should assume a more normalized revenue growth pattern.

Calgary hotel performance is expected to normalize in 2026 after a strong recovery cycle. CBRE Hotels forecasts 2026 Calgary occupancy of 65%, ADR of $190 and RevPAR of $124, compared with 66%, $193 and $127 in 2025F. The slight pullback in ADR and RevPAR suggests a market moving from rebound-driven pricing toward more normalized demand. [4]

The sector still benefits from Calgary's improving air access, event demand, business travel and regional tourism. Travel Alberta's hotel performance dashboard tracks occupancy, ADR and RevPAR as early indicators of tourism revenue, and its recent updates showed provincial year-over-year gains across major hotel metrics earlier in 2026. [5]

Development feasibility remains selective. Altus' 2026 Calgary cost guidance indicates budget hotel hard costs of $250-$340 psf, suite hotels at $310-$430 psf and four-star full-service hotels at $330-$455 psf, before FF&E, land, soft costs and operator-specific standards. [9]

Source: CBRE Hotels 2026 Outlook.

Calgary major market hotel performance and 2026 forecast. Source: CBRE Hotels.

Medical / healthcare real estate

Healthcare real estate should be assessed as a defensive demand theme rather than a single homogeneous property category.

Medical office is not typically reported with the same public quarterly granularity as office, industrial and retail; therefore this report treats medical as a thematic and feasibility category. The core thesis is defensive demand: healthcare services are less cyclical than discretionary retail or office employment, while outpatient care, diagnostics, ambulatory services and population growth continue to support space needs. [6]

PwC/ULI's 2026 medical office outlook highlights healthcare real estate as positioned to outperform, citing demographic tailwinds, sustained outpatient demand, tight market conditions, limited new construction and expected strengthening investor activity as capital markets ease. [6]

For Calgary, the opportunity is node-specific. The strongest locations are adjacent to major hospitals and health campuses, in growing suburban communities with primary-care deficits, and in retail-adjacent settings that support accessibility, parking and convenience. AHS notes that Alberta Health Services, Alberta Health and Alberta Infrastructure plan, build and deliver healthcare facilities to meet capital needs and access priorities across the province. [10]

Precedent Developments analysis based on PwC/ULI, AHS capital planning and Calgary market fundamentals.

Notable transactions and capital activity

The table below summarizes publicly reported notable Calgary transactions and transaction-adjacent development activity that inform the Q1 2026 market narrative. It is not a land-title registry extract and excludes non-public or undisclosed private trades.

Publicly reported activity shows that capital remains focused on income durability, repositioning opportunities, grocery/needs-based retail, logistics and multi-family. Several early-Q2 announcements are included because they were disclosed before this report date and provide immediate post-quarter evidence of investor sentiment.

Sources: RENX Calgary archive; Newswire releases; Retail Insider; STOREYS; CoStar summary. Transaction values are included only where publicly reported.

Development cost and feasibility benchmarks

Cost discipline is the central feasibility variable for 2026: Calgary cost escalation is not uniform, but hard-cost pressure remains meaningful in specialized, institutional and high-specification asset classes.

Cost is the feasibility throttle across all categories. The Altus 2026 Canadian Cost Guide notes that unit rates are hard construction costs only and should be treated as initial budgeting benchmarks, not replacement-cost estimates or project-specific estimates. Rates exclude many soft costs and site-specific conditions; underground parking, unusual site conditions and premium design need separate allowance. [9]

For Calgary, industrial shell costs remain the lowest among the covered categories, while medical and acute-care buildouts are the most specialized. Hotel and office feasibility are especially sensitive to FF&E, tenant improvements, parking efficiency and operator/tenant standards. [9]

Source: Altus Group 2026 Canadian Cost Guide, Calgary ranges. Midpoints shown for illustration only.

Hard construction costs only. Excludes land, soft costs, financing, taxes, FF&E and other project-specific costs unless noted. Source: Altus Group 2026 Canadian Cost Guide.

Risk watchlist for 2026

·       Energy-sector mergers and acquisitions could release additional downtown office sublease space.

·       Industrial availability may normalize as tenants vacate duplicate space after relocations and as the 2027 development pipeline delivers.

·       Retail tightness may limit tenant expansion and create upward pressure on rents, but this can also suppress deal flow.

·       Hotel RevPAR could be pressured by weaker discretionary travel, new supply or softness in corporate travel.

·       Medical demand is defensive but highly dependent on tenant covenants, licensing, fit-out cost and reimbursement/funding environment.

·       Tariffs, material price volatility and skilled-trade constraints may affect construction budgets and schedules.

Source notes

[1] Colliers, Calgary Downtown Office Market Report Q1 2026. Downtown office vacancy, absorption, class data, conversions and outlook. https://www.collierscanada.com/en-ca/research/calgary-downtown-office-market-report-q1-2026

[2] Colliers, Calgary Industrial Market Report Q1 2026. GCA industrial vacancy, absorption, construction pipeline and submarket data. https://www.collierscanada.com/en-ca/research/calgary-industrial-market-report-q1-2026

[3] Barclay Street Real Estate, Calgary First Quarter 2026 Retail Leasing Landscape. Retail occupancy, vacancy, absorption, format and location data. https://barclaystreet.com/wp-content/uploads/2024/07/BSRE_Market_Analysis_Q1_2026_Retail.pdf

[4] CBRE Hotels, Canadian Hotel Industry Outlook Q3 2025 / 2026 Outlook. Calgary hotel 2026 forecast for occupancy, ADR and RevPAR. https://www.cbre.ca/insights/reports/cbre-hotels-canada-industry-2026-outlook

[5] Travel Alberta, Hotel Performance Dashboard. Hotel occupancy, ADR and RevPAR indicators for Alberta and regional tourism demand. https://industry.travelalberta.com/research/tourism-indicators/hotel-performance

[6] PwC / ULI, Emerging Trends in Real Estate 2026 - Medical Office. Medical office positioning, outpatient demand and defensive characteristics. https://www.pwc.com/us/en/industries/financial-services/asset-wealth-management/real-estate/emerging-trends-in-real-estate-pwc-uli/property-type-outlook/medical-office.html

[7] Calgary Economic Development, 2026 Economic Outlook. Macro backdrop: GDP growth, labour market, population and uncertainty. https://www.calgaryeconomicdevelopment.com/newsroom/2026-economic-outlook-diversification-and-innovation-chart-calgarys-path-through-global-turbulence/

[8] Bank of Canada, Press releases / interest rate decision. Policy rate and financing-cost context. https://www.bankofcanada.ca/press/press-releases/

[9] Altus Group, 2026 Canadian Cost Guide. Calgary construction hard-cost benchmarks by asset class. User-provided PDF, Altus_2026_Canadian-Cost-Guide_ENG.pdf

[10] Alberta Health Services, Capital Projects. Healthcare facility planning, capital needs and access priorities. https://albertahealthservices.ca/about/capitalprojects.aspx