Ottawa–Gatineau office market · Second quarter 2026

Ottawa’s office market is quietly splitting in two

Newer, better buildings are filling up while older ones sit half empty. For any business thinking about its next move, that gap is where the opportunity, and the risk, now lives.

If you only glance at the headline number, Ottawa’s office market looks soft. Vacancy is up, demand is flat, and the wave of new construction that once defined the city has all but stopped. But the single number hides the real story. The market is no longer moving as one. It has divided into two very different halves, and which half your building sits in now decides almost everything about your rent, your options, and your leverage at the table.

The flight to quality is real

The clearest way to see the split is to line up old buildings against new ones. In older buildings completed before 2010, roughly one in six desks sits empty. In buildings finished since 2010, it is closer to one in twenty. Same city, same economy, wildly different outcomes.

This is what people mean by the flight to quality. When conditions soften, businesses use the moment to trade up. They move into newer, better located space, often taking a little less of it, and leave the tired buildings behind. The result is a churn driven market: tenants shuffle between buildings without adding much new demand overall.

One encouraging sign underneath the noise: businesses are signing longer. The average new lease now runs about 61 months, up from roughly 38 a year earlier. Companies are committing again, they are just committing to better space.

Quality is no longer a nice-to-have. It is the whole market.

What happens next depends on the government, and on demand coming back

Ottawa runs on the public sector, so federal decisions ripple straight through the office market. Two of them pull in opposite directions. The government plans to reduce its workforce by roughly 40,000 positions over the coming years, which will trim how much space it needs. At the same time, it has brought staff back to the office four days a week, with senior management in five days.

That return-to-office shift is the wildcard. Some departments cut space aggressively during the remote years, and bringing everyone back may leave them short. If they need to lease again, expect it to be in newer, energy-efficient buildings, which is exactly where space is already tightest.

Beyond government, the private side has real momentum. Federal spending is flowing into technology, defence, housing and infrastructure, and Ottawa’s deep bench of engineers and a highly educated workforce, nearly half the city holds a degree, gives those sectors room to grow. Companies like Kinaxis, Nokia, Telesat and Thales anchor the Kanata tech corridor, while downtown leans on government and professional services.

Rents are still a bargain by big-city standards

Even the best downtown space in Ottawa costs far less than the going rate in Toronto or Vancouver. For a company weighing where to base a team, that gap is worth a hard look. And because landlords are still competing hard for tenants, the real all-in cost, after free months and other incentives, often lands below the quoted rent, closer to $29 a foot.

Where you sit still matters

Pricing varies a lot across the region. Downtown commands the highest rents, with the surrounding core and Tunney’s Pasture close behind. Head out to the suburbs and the same dollar buys noticeably more space. If your team does not need a downtown address, the outer submarkets remain the value play.

What this means for your next move

Almost no new office space is being built. Only about 220,000 square feet is under construction, most of it a single project in Kanata, and that is a steep drop from recent years. Meanwhile the oldest, least useful buildings are being pulled down or converted to housing. The 110 O’Connor Street tower downtown, for example, is being replaced by a 26-storey residential building.

Less supply, plus the steady removal of obsolete space, should gradually tighten the market and firm up rents in the better buildings. Translation for tenants: the deals available today on quality space, generous incentives, room to negotiate, will not last forever. If a move or renewal is on your horizon in the next year or two, the window to lock in favourable terms is open now.

The market is soft on average and tight where it counts. Know which half you are shopping in.