Government and private sector employers across Canada are ordering more and more of their workers to return to work at the office. The back-to-the-salt-mine moves are aimed partly at boosting productivity and encouraging workplace collaboration, but return-to-office is also designed to help stabilize the commercial real estate market, which was hit hard during the COVID years.
But is it really helping? Some think so. “The most obvious beneficiaries of return-to-work mandates [are] the office spaces themselves,” a report in August 2025 by Royal Bank of Canada’s investor team says. “Now may be the time to consider who might benefit from return to work and who may not.” Yet other experts say not so fast—the effects of return-to-office on real estate are just starting to emerge.
However it plays out, the outcome should be significant for Canadian commercial real estate investors. In this decade, Canadian workers have been working remotely more than workers in any other country, so any change could make a difference.
“The movement of workers back to offices is still in transition,” says Eliezer Timolien, Office Research Lead at Colliers Canada. In May, Statistics Canada reported that the percentage of employed Canadians working from home declined year-over-year, down to 17.4 per cent from 18.7 per cent in 2024, and the migration to cubicles and corner suites seems to be continuing.
“We see that a lot of downtown employers across Canada are preparing to bring people back to their buildings, but a lot of the data is still anecdotal, and many of the new policies haven’t taken effect yet,” Timolien says.
For example, the August decree by Ontario Premier Doug Ford that the province’s 16,000 public service employees head back five days a week doesn’t start until Jan. 1, 2026. The federal government’s rules, which began in September 2024, calls for workers to be in the office only part-time, at least three days a week.
Municipal employees are also working in offices more. In August, the City of Ottawa said that 85 per cent of its workers were already in their offices.
At the same time, Canada’s corporate world seems also to be moving toward sending workers back, either part- or full-time.
“We’re seeing a lot of the movement back among banks and financial service companies,” Timolien says. By August, four of the Big Six banks had mandated that their workers come in at least four days per week—BMO, RBC, Scotiabank and TD. CIBC and National Bank have maintained more flexible policies.
But prodding people back to offices is not only happening in financial services, Timolien says. “We’re also seeing tech companies falling into line with return-to-office.”
Much of the move seems driven by a perception that productivity lags when more people work from home. This is contested by some workers who say they are more productive and happy to avoid the time and expense of commuting.
The debate is likely to continue as long as some workers like being home and employers would like them to show up in person. But the looming question for real estate owners, managers and investors is, still, what’s going to happen to office space?
Office occupancy in major centres like Toronto began to climb in 2022, as the pandemic subsided and there was a first wave of back-to-office decrees. By the middle of this year, occupancy levels in Toronto climbed to 78 per cent of their pre-pandemic levels, peaking on Wednesdays at 88 per cent, as many people were able to work hybrid shifts with some days at home.
“The first wave of return-to-office was smaller than expected and so failed to reward investors,” said Victor Couture, associate professor of economic analysis and policy at the University of Toronto’s Rotman School of Management, in the RBC research article.
“But a second wave, even if [it’s a smaller change from three days to four or five], could possibly lift valuations,” he says. This is because valuations, particularly for some real estate investment trusts (REITs), are trading at near historic lows, he explains.
Investors in some funds that invest in construction or commercial property have been finding that their investments are being “gated”— prevented from selling so the funds can avoid a run of redemptions. Late last year, for example, KingSett Capital Inc., which owns marquee downtown office properties, halted redemptions on its flagship Canadian Real Estate Fund, presumably awaiting an uptick in commercial real estate fortunes.
“The [commercial real estate] market is still trying to find its footing,” Colliers’ Timolien says.
Office vacancy rates are still above 10 per cent in Toronto (though not Vancouver) but supply is tightening, according to CBRE’s Canada Office Figures report for the second quarter of this year.
“Construction [of new office space] has stalled” and it has been “two years since any meaningful projects have commenced,” Timolien says.
Couture and Timolien both point to increased interest in leasing the more prestigious Class A office spaces as more and more people are ordered back to work, and Timolien thinks this is likely to extend to Class B and C properties as more people are ordered to pack up their home working stations for at least a few days a week.
“The demand for those lower-grade spaces is likely to grow, but there are still going to be challenges filling some of them because many of them are older buildings that need maintenance and repairs,” Timolien says.
It helps, as well, to take steps to make people want to come to the office, Timolien adds.
“Amenities and attractions that bring foot traffic, restaurants, musicians in the courtyard can make a difference,” he says.
The growing legions of hybrid workers also could mean opportunity for the restaurants and fast-food outlets adjacent to offices, reports suggest. “When they’re in the office, they’re often more willing to splurge on a quick, enjoyable meal out,” research firm Revenue Management Services says.
This makes sense, Timolien says.
“Offices that have ready access to retail tend to outperform those that don’t [in occupancy]. If your building is close to a gym or a café, you’re in the game,” he says.
Bottom line: The commercial real estate market is still in transition, but as more and more Canadians settle back into commuting to work, the upside for investors is coming into view.
David Israelson is a writer, editor, consultant and non-practising lawyer. He is principal of Eon Communications and Research, which he founded after more than a decade as a senior public relations executive. David contributes regularly to national and international print and online publications in addition to corporate and institutional writing across all media. He writes extensively on business, finance and investment, sustainability, conservation, energy, housing and land-use planning, international trade, travel and transportation politics and real estate, among other areas.
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