The Canadian and U.S. office markets are enjoying their best year since the COVID-19 pandemic, says Lee & Associates.

Vacancy declines were recorded in the second quarter across Canada and the U.S. for the first time since the pandemic upended the North American office market in 2019, Lee & Associates reported.

“Tenant growth has returned and institutional investors are showing greater confidence in premium assets,” the firm said in its 2026 Q2 North American Market Report. “Also, with little new space being built and more obsolete office properties being redeveloped, total inventories in the U.S. and Canada declined together for the first time on record.”

The turnaround for U.S. office over the past four quarters has totalled 29.7 million square feet. Following first-half net growth of 16.7 million square feet, the U.S. market is on track in 2026 to halt its six-year slide in tenant expansion. Year-to-date net absorption in Canada totals 4.4 million square feet and this year could surpass the 5.4-msf total for 2019.

The Canadian absorption increase comes after public-sector organizations and private-sector companies, particularly financial services firms, started requiring employees to work in the office more often.

Not all metros report strong performances, though. New York City, Dallas, Austin, Houston, San Francisco and San Jose are surging, while Los Angeles, Chicago, St. Louis and Washington, D.C., still seek stability, reported Lee & Associates.

The report found that Canada had lower office vacancy rates on average, 9.8% versus 13.8%. But the U.S. is a much larger market overall, with millions of more square feet of assets than its northern neighbour.

American office spaces sold for more than their Canadian counterparts, acheiving an average price of $37.08 per square foot compared to $26.16 psf.

— With files from Monte Stewart

Photo: Dallas skyline