Alberta enters 2026 from a position of relative strength, moving toward stabilization after several years of exceptional population growth and booming multifamily construction. However, shifting market dynamics are impacting momentum in the sector. Higher land and construction costs are reducing developers’ profitability and projected cash flow. Also, insured financing has become less attractive under tightened Canada Mortgage and Housing Corporation (CMHC) multifamily programs.
ATB’s Economics and Real Estate Teams have been tracking these trends closely across the province. For several years, multifamily housing was Alberta’s strongest performer, driven by sustained population growth that kept demand ahead of available supply. In 2025, however, new inventory began exceeding demand, increasing vacancy rates and softening rents. Developers continued to deliver projects despite elevated costs and less favourable financing conditions. In 2026, ATB’s Real Estate Team expects the sector to transition from rapid expansion to a more balanced period as the market absorbs recent additions.
The office subsector, by contrast, continued to face elevated downtown vacancy and deep polarization between older assets and modern, amenitized buildings. While A-class space outperformed, many owners of aging inventory grappled with declining competitiveness, value resets, and the need for reinvestment or conversion. For example, Calgary's grant program that offered developers $75 per square foot has been successful. With nearly 20 projects approved, the city is set to remove over 2.5 million square feet of office space from the market, creating more than 2,500 new homes.
Looking ahead, Alberta’s broader economic landscape is expected to remain resilient, compared to the rest of Canada. ATB’s Economics Team anticipates some moderation in population growth and notes signs of consumer strain; however, pressures are expected to ease in 2026 as unemployment rates cool off from 7.2% in 2025 to 6.5% in 2026. Even so, Alberta remains one of Canada’s most dynamic and opportunity-rich markets. ATB’s Real Estate Team cites Alberta’s long-term fundamentals as key drivers of continued investment across key asset classes.
The 67-page Liberal platform document, coupled with recent media coverage and statements from Prime Minister Carney, provides a foundational understanding of the government's intended policy direction.
While the Speech from the Throne on May 27th will offer further clarity on immediate priorities, it's crucial to acknowledge that stated intentions are subject to the complexities of execution, potentially leading to delays or modifications.
Demand remains healthy, though moderating from previous highs, keeping this sector well-positioned for 2026. Performance will depend on the lease-up of recent supply and how slowing population growth and lower construction activity influences market balance.
This sector remains a top real estate performer heading into 2026 with low vacancy, steady absorption, and sustained resilience amid substantial new supply. Strong logistics and warehousing activity to keep performance stable even as growth moderates.
High occupancy rates and strong demand for necessity-based retail in suburban areas to keep this real estate sector resilient. But shifting consumer spending preferences may temper performance in 2026.
Tourism delivered another standout year, with strong domestic and international travel lifting hotel performance above pre-pandemic levels. Alberta’s position as Canada’s fastest-growing tourism destination supports continued strength. However, momentum is expected to moderate from 2025’s peak.
Market polarization persists, with A-class and newly renovated buildings outperforming older inventory. Meanwhile, rising upgrade costs are prompting some B- and C-class asset owners to sell at reduced prices, drawing renewed investor interest.
Demand remains healthy, though moderating from previous highs, keeping this sector well-positioned for 2026. Performance will depend on the lease-up of recent supply and how slowing population growth and lower construction activity influences market balance.
Industrial
Retail
Hospitality
Office
Multifamily
This sector remains a top real estate performer heading into 2026 with low vacancy, steady absorption, and sustained resilience amid substantial new supply. Strong logistics and warehousing activity to keep performance stable even as growth moderates.
Retail
Hospitality
Office
Multifamily
Industrial
High occupancy rates and strong demand for necessity-based retail in suburban areas to keep this real estate sector resilient. But shifting consumer spending preferences may temper performance in 2026.
Hospitality
Office
Multifamily
Industrial
Retail
Tourism delivered another standout year, with strong domestic and international travel lifting hotel performance above pre-pandemic levels. Alberta’s position as Canada’s fastest-growing tourism destination supports continued strength. However, momentum is expected to moderate from 2025’s peak.
Office
Multifamily
Industrial
Retail
Hospitality
Market polarization persists, with A-class and newly renovated buildings outperforming older inventory. Meanwhile, high replacement costs and compelling cap rates are drawing investor interest to some B- and C-class assets, though buyers should expect capital outlays to refurbish and potentially repurpose these properties.
Population growth
Interest rates
Growing labour force
Affordability edge
Alberta’s population growth is the defining real estate trend of 2025, influencing demand across every major asset class. For business leaders, this trend remains a reliable signal of where future demand will land across residential, commercial, and industrial assets.
Alberta’s population reached just over 5 million in mid-2025, growing 2.5% year-over-year. While this is a step down from the record highs seen in 2023 and 2024, Alberta remains Canada’s fastest-growing province.
However, population growth will moderate in 2026 as federal immigration policies lead to a net outflow of non-permanent residents (NPRs). The years 2022 to 2025 saw a cumulative gain of 208,000 NPRs, while ATB’s December Outlook calls out for an expected outflow of 10,000 NPRs in 2026 and 8,000 in 2027.
Even with these losses, Alberta’s population growth will continue to outpace most provinces. The ATB Economics Team forecasts a 1.5% population increase in both 2026 and 2027, supporting steady demand for real estate even as growth slows from the record highs of 2024 and 2025. Most newcomers will continue to concentrate in the Calgary–Edmonton corridor and larger surrounding communities. As affordability declines in major centers, many smaller rural areas could see an increase in population growth.
Alberta’s growth comes from three primary sources:
Together, these factors created a mix of renters, first-time buyers, and households looking for more space—intensifying competition for new and existing homes.
Population growth
Interest rates
Growing labour force
Affordability edge
Today’s interest-rate environment is reshaping how businesses, households, and investors approach real estate in Alberta. Understanding both its upsides and limitations is critical: lower borrowing costs are a positive, but they aren’t enough on their own to unlock a boom.
In 2024-2025, the Bank of Canada (BoC) moved into easing mode, lowering its benchmark interest rate to 2.25 % from 5%. This drop reduces borrowing costs for many households and businesses, particularly those with variable-rate debt or lines of credit. In the December Economic Outlook, ATB’s Economics Team based case is that the BoC is at the end of its rate-cutting cycle and stays on hold through next year.
Here are the key ways this rate environment impacts real estate in Alberta:
Population growth
Interest rates
Growing labour force
Affordability edge
Population growth continues to swell the labour force, but hiring is only partially keeping pace. The ATB Economics Team found that employment in late-2025 trended stronger than earlier forecasts, tracking about 2.9 % year-to-date. Yet, the pace of job creation was slow to fully absorb the influx of new entrants. With population growth expected to slow in 2026 while job creation continues, labour market pressures should ease somewhat.
Because many newcomers remain unemployed or underemployed, demand for housing ownership may soften, while rental demand remains higher. Newcomers, viewing the current unemployment numbers as a deterrent to immediate investment, will likely prioritize renting as a safer option. In addition, businesses facing uncertainty may delay real estate investment and expansion decisions. These factors may cool demand for both commercial and residential real estate.
Rapid population growth is reshaping Alberta’s labour force. But as more newcomers entered the province over the past three years, job creation failed to keep pace. In 2025, Alberta’s unemployment rate averaged 7.3% (through November), although it is expected to ease to 6.5% in 2026 as population growth slows and labour inflows moderate. Alberta continues to add jobs, with employment growth forecast at 2.8% in 2026 and 1.6% in 2027. Yet skills mismatches remain, particularly in the construction trades. A lower number of non-permanent residents will reduce competition for some positions but create challenges for employers, especially in smaller centres and in sectors that rely heavily on international students and temporary foreign workers.
Although sectors such as construction, technology, and food processing continue to show strength, many industries remain cautious about expanding headcount amid global uncertainty, cost pressures, and softer economic conditions.
This uncertainty also impacts real estate decisions at the household level: when workers are unemployed or worried about job stability, they are far less likely to buy a home, move up in the market, or take on new financial commitments.
The factors behind Alberta’s shifting labour-market dynamics are multifaceted. Several forces are contributing to slower job absorption despite ongoing employment gains.
Population growth
Interest rates
Growing labour force
Affordability edge
Affordability remains a major differentiator in Alberta’s housing market, and the strength of new construction activity supports that advantage. For real estate leaders, the combination of comparatively lower home and rental prices, plus a surge in housing starts (especially multifamily rental units), creates both opportunity and risk. The key question is how long the affordability advantage will remain and whether the fast-rising starts can match growing demand.
Housing starts in 2025 hit a record high, driven by multifamily construction.
In 2025, Alberta offered a clear affordability edge. The province’s benchmark resale home price in November 2025 was about $506,600, compared with a national average of over $674,800. Lower average asking rents further amplify this advantage.
Record-breaking housing starts helped relieve some pressure on prices and rents by adding much-needed supply to fast-growing markets. The surge leans heavily toward multi-unit construction with rental apartments, condos, and other high-density housing outpacing single-detached homes.
But even with this strong pace, ATB’s Economics Team warns that if new housing cannot keep up with population growth and in-migration, Alberta’s affordability edge could erode. Labour-market uncertainty may also slow ownership demand, as households facing job insecurity are less likely to enter or move up the housing market.
Alberta’s construction environment also benefits from comparatively lower land costs, and more predictable development timelines than many major Canadian markets. In addition, federal and provincial programs—including support for purpose-built rentals and office-to-residential conversions—are helping align new supply with growing demand.
Looking ahead, construction momentum is projected to ease in 2026 as population growth cools, tempering the pace of new supply. This marks a natural cooling period as the market absorbs the large volume of supply delivered over the past two years.
The current momentum in Alberta’s housing market isn’t happening by accident. Factors, from migration to affordability, are shaping supply and demand.
Alberta’s population growth is the defining real estate trend of 2025, influencing demand across every major asset class. For business leaders, this trend remains a reliable signal of where future demand will land across residential, commercial, and industrial assets.
Alberta’s population reached just over 5 million in mid-2025, growing 2.5% year-over-year. While this is a step down from the record highs seen in 2023 and 2024, Alberta remains Canada’s fastest-growing province.
However, population growth will moderate in 2026 as federal immigration policies lead to a net outflow of non-permanent residents (NPRs). The years 2022 to 2025 saw a cumulative gain of 208,000 NPRs, while ATB’s December Outlook calls out for an expected outflow of 10,000 NPRs in 2026 and 8,000 in 2027.
Even with these losses, Alberta’s population growth will continue to outpace most provinces. The ATB Economics Team forecasts a 1.5% population increase in both 2026 and 2027, supporting steady demand for real estate even as growth slows from the record highs of 2024 and 2025. Most newcomers will continue to concentrate in the Calgary–Edmonton corridor and larger surrounding communities. As affordability declines in major centers, many smaller rural areas could see an increase in population growth.
Alberta’s growth comes from three primary sources:
Together, these factors created a mix of renters, first-time buyers, and households looking for more space—intensifying competition for new and existing homes.
Today’s interest-rate environment is reshaping how businesses, households, and investors approach real estate in Alberta. Understanding both its upsides and limitations is critical: lower borrowing costs are a positive, but they aren’t enough on their own to unlock a boom.
Fixed mortgage rates aren’t falling as quickly as policy rates due to bond yields, lender risk, and tariff uncertainty.
Lower rates improve affordability and confidence, but they won’t be a silver bullet for stronger economic or real-estate growth.
In 2024-2025, the Bank of Canada (BoC) moved into easing mode, lowering its benchmark interest rate to 2.25 % from 5%. This drop reduces borrowing costs for many households and businesses, particularly those with variable-rate debt or lines of credit. In the December Economic Outlook, ATB’s Economics Team based case is that the BoC is at the end of its rate-cutting cycle and stays on hold through next year.
Here are the key ways this rate environment impacts real estate in Alberta:
Population growth continues to swell the labour force, but hiring is only partially keeping pace. The ATB Economics Team found that employment in late-2025 trended stronger than earlier forecasts, tracking about 2.9 % year-to-date. Yet, the pace of job creation was slow to fully absorb the influx of new entrants. With population growth expected to slow in 2026 while job creation continues, labour market pressures should ease somewhat.
Because many newcomers remain unemployed or underemployed, demand for housing ownership may soften, while rental demand remains higher. Newcomers, viewing the current unemployment numbers as a deterrent to immediate investment, will likely prioritize renting as a safer option. In addition, businesses facing uncertainty may delay real estate investment and expansion decisions. These factors may cool demand for both commercial and residential real estate.
Unemployment rates are expected to fall to 6.5% in 2026, as more jobs are created while population growth slows.
Slower population growth is expected to cool housing demand and the pace of consumer spending in 2027.
Employment growth is forecast to average 2.8% in 2026 and 1.6% in 2027, helping to rebalance the market.
Rapid population growth is reshaping Alberta’s labour force. But as more newcomers entered the province over the past three years, job creation failed to keep pace. In 2025, Alberta’s unemployment rate averaged 7.3% (through November), although it is expected to ease to 6.5% in 2026 as population growth slows and labour inflows moderate. Alberta continues to add jobs, with employment growth forecast at 2.8% in 2026 and 1.6% in 2027. Yet skills mismatches remain, particularly in the construction trades. A lower number of non-permanent residents will reduce competition for some positions but create challenges for employers, especially in smaller centres and in sectors that rely heavily on international students and temporary foreign workers.
Although sectors such as construction, technology, and food processing continue to show strength, many industries remain cautious about expanding headcount amid global uncertainty, cost pressures, and softer economic conditions.
This uncertainty also impacts real estate decisions at the household level: when workers are unemployed or worried about job stability, they are far less likely to buy a home, move up in the market, or take on new financial commitments.
The factors behind Alberta’s shifting labour-market dynamics are multifaceted. Several forces are contributing to slower job absorption despite ongoing employment gains.
Affordability remains a major differentiator in Alberta’s housing market, and the strength of new construction activity supports that advantage. For real estate leaders, the combination of comparatively lower home and rental prices, plus a surge in housing starts (especially multifamily rental units), creates both opportunity and risk. The key question is how long the affordability advantage will remain and whether the fast-rising starts can match growing demand.
Housing starts in 2025 hit a record high, driven by multifamily construction.
New construction activity remains concentrated in urban and near-urban markets, while households chasing affordability could drive growth in satellite communities.
Strong housing starts aren’t keeping pace with Alberta’s rapid population growth. Following a catch-up year in 2025, homebuilding should moderate in 2026, although it will stay above historic levels as the market balances.
In 2025, Alberta offered a clear affordability edge. The province’s benchmark resale home price in December 2024 was about $516,200, compared with a national average of over $723,600. Lower average asking rents further amplify this advantage.
Record-breaking housing starts helped relieve some pressure on prices and rents by adding much-needed supply to fast-growing markets. The surge leans heavily toward multi-unit construction with rental apartments, condos, and other high-density housing outpacing single-detached homes.
But even with this strong pace, ATB’s Economics Team warns that if new housing cannot keep up with population growth and in-migration, Alberta’s affordability edge could erode. Labour-market uncertainty may also slow ownership demand, as households facing job insecurity are less likely to enter or move up the housing market.
Alberta’s construction environment also benefits from comparatively lower land costs, and more predictable development timelines than many major Canadian markets. In addition, federal and provincial programs—including support for purpose-built rentals and office-to-residential conversions—are helping align new supply with growing demand.
Looking ahead, construction momentum is projected to ease in 2026 as population growth cools, tempering the pace of new supply. This marks a natural cooling period as the market absorbs the large volume of supply delivered over the past two years.
The current momentum in Alberta’s housing market isn’t happening by accident. Factors, from migration to affordability, are shaping supply and demand.
Multifamily stabilizes after record construction.
Vacancy rates are easing toward a balanced market as population growth moderates and new supply is absorbed.
Industrial remains one of Alberta’s strongest real estate sectors.
Following tight but easing conditions, 2026 should stay robust while moderating into a more balanced market as new supply is absorbed.
Retail remains resilient amid cautious spending.
High occupancy and population-driven suburban demand offset softer discretionary activity.
A tourism surge fuels sector strength.
Record spending and robust domestic and international travel lift hotels and service-based businesses.
Office is reshaping, not retreating.
The flight-to-quality trend continues, while value opportunities in B- and C-class assets may drive more transactions.
Multifamily stabilizes after record construction.
Vacancy rates are easing toward a balanced market as population growth moderates and new supply is absorbed.
Industrial remains one of Alberta’s strongest real estate sectors.
Following tight but easing conditions, 2026 should stay robust while moderating into a more balanced market as new supply is absorbed.
Retail remains resilient amid cautious spending.
High occupancy and population-driven suburban demand offset softer discretionary activity.
A tourism surge fuels sector strength.
Record spending and robust domestic and international travel lift hotels and service-based businesses.
Office is reshaping, not retreating.
The flight-to-quality trend continues, while value opportunities in B- and C-class assets may drive more transactions.
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Alberta’s multifamily sector enters 2026 with population growth still well above historical norms, even as the pace moderates from record levels. Gains from permanent immigration and interprovincial migration will continue to drive steady rental demand, offsetting expected declines in non-permanent residents.
At the same time, 2025’s record-breaking surge in rental construction added much-needed supply, easing some of the pressure that had built up during the migration boom. Asking rents declined 5.3% year-over-year as new inventory became available, reflecting a shift to a more balanced, competitive market that favours tenants and improves affordability. The ATB Real Estate Team is watching how moderating population growth and a cooling construction pipeline shape the sector as it transitions from rapid expansion toward stabilization in 2026.
Alberta enters 2026 after three years of exceptional demographic growth. The province’s population increased by 4.7% in 2024 and 2.5% in 2025—well above national rates—created rental demand that far exceeded available supply. The ATB Economics Team expects population growth to moderate to 1.5% in both 2026 and 2027, allowing the housing market to gradually rebalance.
The record number of multifamily starts in 2025 added much-needed inventory and helped stabilize rents as builders worked to keep up with the migration boom. The year’s surge was driven largely by multi-unit projects, though single-detached starts also trended higher than the national average.
The market softened in the latter half of the year as supply increased and migration levels eased. Construction activity is expected to cool in 2026 as higher costs and land prices make new projects more challenging, giving the market time to absorb its recent additions. Edmonton’s strong 2025 performance is likely to taper, following Calgary’s slowdown earlier in the year.
Economic uncertainty is delaying homebuying for some, particularly younger workers and newcomers, keeping more households in the rental market longer. Rents are expected to remain essentially flat in 2026 as the market absorbs recent supply. Even with moderating construction, multifamily rental will remain the dominant form of new housing, with increased inventory and stable rents signaling a sector moving toward balance rather than expansion.
Among those looking to buy, affordability constraints and a challenging labour market could push some entry-level purchasers toward townhomes as single-family homes move further out of reach. More buyers are also choosing satellite communities such as Airdrie, Okotoks, and Chestermere over pricier cities. The new GST waiver for first-time homebuyers could also impact purchasing decisions once it gets implemented in 2026.
Multifamily housing is expanding across Alberta, ranging from innovative city projects to revitalized small towns. In Calgary, ATCO and Attainable Homes constructed an 84-unit prefabricated modular complex to tackle housing affordability. By manufacturing fully finished units off-site in a local factory and stacking them on-site in just 10 days, the developers are reducing standard construction timelines by more than half, allowing for occupancy in under nine months.
Edmonton’s Century Gardens maximizes the economic value of land through transit-oriented development. Over the next decade, this nine-phase project will transform ~25 acres into a high-density, mixed-use urban village. By clustering high-density rentals and amenities next to the LRT, the project creates a self-sustaining economy that reduces residents' reliance on cars. When complete, this urban village is set to provide 2,490 residential rental units and 123,000 sq ft of commercial space to the retail market.
This trend extends to smaller communities. Rising costs in major cities are pushing demand toward rural areas, making development viable in these markets. This economic shift prompted Calmar, a town southwest of Edmonton, to break ground on its first apartment building since the 1970s.
Industrial is expected to be one of Alberta’s top real estate performers in 2026, supported by historically low vacancies and a diversified economy. Demand from logistics, distribution, and Alberta’s expanding industrial base continues to outpace new supply, keeping rents elevated despite a more balanced development pipeline. While growth may normalize, the sector’s fundamentals remain stronger than any other asset class.
The industrial sub-sector enters 2026 from a strong position, although its performance moderated from the previous year. Alberta’s population growth leads the country, supporting higher demand for distribution, warehousing, and e-commerce space tied to a larger consumer base. At the same time, ongoing economic diversification—spanning aviation, logistics, food processing, technology, tourism, critical minerals, petrochemicals, and renewable energy—continues to fuel industrial absorption. However, uncertainty in the broader economic environment still impacts business’s real estate decisions.
The ATB Economics Team’s forecast points to a year of moderated momentum rather than a shift in direction. Their latest ATB forecast expects Alberta’s economy to grow by 2.1% in 2026 and by another 2.4% in 2027, outpacing Canada's 1.6% and 1.8% national growth rates. While risks remain—particularly around trade tensions—ATB’s outlook reflects a middle-ground, cautiously optimistic view supported by some stability in tariffs, financing conditions, and interest-rate expectations.
ATB’s Real Estate Team reinforces this perspective: moderated activity is considered healthy after several years of outsized growth, and improved economic certainty should help support steady industrial demand. In this environment, some tenants may delay major expansion decisions, but underlying demand remains intact.
High construction and land costs are also likely to temper future development, even as recently-built facilities add needed capacity. As these modern projects are delivered, competition for space should ease slightly, with more variation in leasing velocity across submarkets and asset types. Even so, industrial conditions remain favourable, supported by strong population growth and a demand base that keeps the sector well-positioned heading into 2026.
Retail continues to hold steady, supported by high occupancy and strong demand for well-located suburban centres. Vacancy in Calgary sits near historic lows, and necessity-based retail continues to perform well even as household spending becomes more cautious. Much of the sector’s recent growth reflects population gains from 2023 to 2025, especially in suburban developments where rising density supports new retail.
While retail spending in dollar terms remains up, slower growth in actual volume reveals mounting consumer pressure, shaping a more measured outlook heading into 2026.
Retail enters 2026 with strong occupancy and limited available space across most Alberta markets. Much of this resilience reflects Alberta’s fast-growing population, which outpaces the national average and drives immediate demand for retail in new and expanding communities. By the end of 2024, individual retail spending was higher in Edmonton than anywhere else in the country, and Calgary was a close runner-up (see graph below).
This dynamic was especially evident in 2025, when rapid growth in new subdivisions helped reinforce retail’s position as one of the province’s top-performing asset classes. Steady traffic for grocery-anchored centres, pharmacies, personal services, and other necessity-led retailers continues to support suburban locations even as household budgets tighten.
But ATB’s Real Estate Team notes that signs of consumer strain are increasingly evident. ATB Financial’s spending data shows retail spending rising year-to-date, yet inflation-adjusted sales have softened as higher prices absorb much of the increase. ATB forecasts that these headwinds will ease as the province’s economy grows by 2.1% in 2026 and 2.4% in 2027. A rebalancing of the labour market in the coming years will lower unemployment rates, improving consumer confidence and bolstering spending.
These mixed signals create a retail landscape defined by both scarcity and caution. High occupancy creates a landlord-favourable environment, but tenant decision-making is more conservative than in earlier post-pandemic years. Demand remains strong for necessity-based and service-oriented retail, while new commitments from discretionary categories may take longer to materialize.
Suburban retail continued to thrive across Alberta and drive new construction. In 2024, Ronmor delivered a 125,000-square-foot centre located near Calgary’s world-famous Spruce Meadows facility. Meanwhile, Edmonton’s EVER Square capitalized on high-traffic commuter routes along Calgary Trail with a premier 5.79-acre mixed-use development. The appeal of these high-quality suburban assets is clear: EVER Square attracted major attention, securing Krispy Kreme's flagship Alberta location—a strong signal of confidence from established international retailers.
Alberta’s hospitality sector is entering 2026 with momentum, powered by a historic surge in tourism, particularly to the mountain parks. Early indicators from 2025 show continued strength across hotels and other hospitality-related businesses. With visitor activity running at elevated levels, the sector is operating from a strong baseline that supports investment, job creation, and real estate demand.
Alberta’s hospitality sector enters 2026 after a positive 2025. Elevated visitor numbers, higher spending per trip, and strong international demand have set a new floor for activity in hotels, restaurants, attractions, and the broader service economy.
In 2025, the number of U.S. travellers returning from Alberta increased by 6.7%, partly due to a favourable exchange rate that made Alberta a more affordable destination. The same period also saw a 1.8% increase in visitor arrivals from other international locations.
At the same time, Alberta benefited from a strong rise in domestic travel. More Canadians opted to vacation within Canada in 2025, boosting tourism for local destinations. This shift contributed to increased visitation across the province, including record attendance at Alberta’s national parks in August 2025. The subsector’s robust performance has also bolstered investor confidence, driving significant capital into the redevelopment of Jasper National Park following the wildfires.
The ATB Economics Team is tracking tourism momentum as a key indicator for hospitality and service-sector real estate heading into 2026. Early indicators show that hospitality remains a prime opportunity for investors. High demand through 2024 and 2025 has increased average daily rates and revenue per available room, strengthening asset performance across the hotel sector. Markets with access to natural attractions, year-round recreation, and convention or event travel remain strong heading into 2026.
Alberta’s office sub-sector remains in a period of transition, characterized by elevated downtown vacancy, cautious tenant activity, and a widening performance gap between aging assets and high-quality space. Calgary continues to lead Canada in office-to-residential conversions, transforming millions of square feet of obsolete inventory and slowly reducing vacancy in the core. While the path to recovery remains long, new and A-class buildings continue to attract tenants through better amenities, energy efficiency, and higher-quality work environments. This performance gap has widened further in 2025, driven by a multi-year flight to quality that is reshaping leasing outcomes across both cities.
The office sector heads into 2026 with a distinctly tiered market profile. While downtown vacancy remains high, Calgary’s consistent efforts to “transform vacancy into vibrancy” through office-to-residential conversions are beginning to reshape supply. The city plans to remove 6 million square feet of vacant office space by 2031, helping to correct years of oversupply while creating 2,655 residential units.
Demand remains selective and driven by quality. ATB Financial’s December economic outlook—marked by moderate GDP growth, easing unemployment, and uncertainty around trade and investment—reinforces the cautious approach many companies are taking toward office commitments. With tenants having numerous options, demand is concentrated in modern, amenity-rich A-class buildings.
Meanwhile, older B- and C-class assets face elevated vacancy and declining competitiveness. Owners of underperforming assets are often left with two paths: reinvest to modernize buildings or pursue office-to-residential conversion, a trend that is expected to accelerate as developers seek to drive new value when traditional office demand remains limited. At the same time, consolidation within the energy sector is releasing more sublease space into the market, keeping downtown vacancy elevated even as conversions help reduce obsolete inventory.
Despite high vacancy, rate pressures, and ongoing work-from-home influences, some signs of stabilization are emerging. ATB’s Real Estate Team notes the sector may have “bottomed out,” with cap rates creating more compelling entry points for investors. Investors are taking advantage of this valuation reset, with some office assets trading at a lower rate. This pricing dynamic is contributing to renewed transaction activity, particularly among buyers with a long-term outlook.
While Edmonton’s office-to-residential conversion market is active, volume lags behind Calgary due to the absence of a comparable municipal subsidy (such as Calgary’s ~$75 per sq. ft. Downtown Development Incentive Program). Despite these financial headwinds, several high-profile partial conversions are proceeding. The Standard (10405 Jasper Avenue) is retrofitting floors 12 through 19 into residential units while retaining commercial space on the lower levels. Similarly, Connect Tower (10020 101A Avenue) is converting floors 4 through 10 into approximately 91 rental units—branded as Connect Residences—while maintaining office space on floors 11 through 19.
Alberta enters 2026 from a position of relative strength, with population growth continuing to support real estate demand even as it moderates from recent highs. This momentum sets the stage for a year defined by stabilization rather than expansion, with clearer investment signals than many other Canadian markets.
Multifamily leads the market heading into 2026 as the sector shifts toward absorption, and construction cools following a record year for housing starts. Seniors’ housing is also emerging from its post-pandemic recovery phase, with select bright spots and long-term demographic trends supporting gradual expansion.
Retail and hospitality remain well-positioned, supported by high suburban occupancy and Alberta’s position as a Canadian tourism leader. Industrial also holds steady, with low vacancy rates and strong logistics demand.
The office sector continues to face elevated vacancy and sharp segmentation, but value resets and discounted pricing are opening new entry points for long-view investors, particularly in A-class and conversion-ready assets. With unemployment expected to ease in 2026, underlying market pressures should gradually soften even as consumer selectivity persists.
Flight-to-quality is expected to persist, with adaptive reuse gaining traction as reinvestment costs rise and discounted B- and C-class assets create value opportunities.
Grocery-anchored, open-air suburban centres are positioned to outperform urban developments, supported by population growth and sustained demand for necessity-based retail.
Conditions are expected to shift towards stabilization following record construction, with continued population growth supporting long-term rental demand and new investor interest.
This sector is poised to remain among the strongest-performing asset classes, with continued strength in mid-size industrial and last-mile logistics.
Construction is expected to expand across Alberta, reflecting broader industrial and infrastructure investment trends.
Flight-to-quality is expected to persist, with adaptive reuse gaining traction as reinvestment costs rise and discounted B- and C-class assets create value opportunities.
Grocery-anchored, open-air suburban centres are positioned to outperform urban developments, supported by population growth and sustained demand for necessity-based retail.
Conditions are expected to shift towards stabilization following record construction, with continued population growth supporting long-term rental demand and new investor interest.
This sector is poised to remain among the strongest-performing asset classes, with continued strength in mid-size industrial and last-mile logistics.
Construction is expected to expand across Alberta, reflecting broader industrial and infrastructure investment trends.
Looking ahead, Alberta offers a more compelling investment outlook than many provinces, supported by stronger demographics and a healthier market balance. ATB’s Real Estate Team expects 2026 to be a year of stabilization, with opportunities emerging for investors who stay focused on fundamentals.
Powering possibilities for our clients, communities, and beyond is what drives us at ATB Financial. As a leading Alberta-based financial institution with over $100 billion in total assets and assets under management, our success comes from more than 5,000 team members who deliver exceptional experiences to over 843,000 clients across our Personal and Business Banking, ATB Wealth Management, and ATB Capital Markets businesses. ATB Financial provides expert advice and services through our extensive branch network and agencies, our 24-hour Client Care Centre, four entrepreneur centers, and our digital banking options. ATB Financial is bronze certified as part of the Partnership Accreditation in Indigenous Relations commissioned by the Canadian Council for Indigenous Business. More information about ATB can be found at atb.com.
This report is intended for general information and educational purposes only and should not be considered specific legal, financial, tax or other professional advice or recommendations. Information presented is believed to be reliable and up-to-date but it is not guaranteed to be accurate or a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the authors as of the date of publication and are subject to change. The actual outcome may be materially different. ATB Financial and any of its affiliates are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by ATB Financial or any of its affiliates and related entities.
