Ontario commercial cap rates in 2026 sit at a Canadian national all-properties average of 6.61% as of Q1 2026, down 2 basis points quarter-over-quarter from Q4 2025's 6.63% (CBRE Canada Q1 2026 Cap Rates and Investment Insights, April 21, 2026). Within Ontario the headline numbers diverge sharply by asset class and geography: Toronto Downtown Class AA office trades at 5.25-7.75%, Toronto Industrial Class A at 5.00-5.25%, Kitchener-Waterloo Downtown Class A office at 6.00-6.75%, and Ottawa Downtown Class AA office at 6.25-6.50% (CBRE Q4 2025 Canadian Cap Rate Report). The macro frame is a Bank of Canada overnight rate held at 2.25% since October 2025, with a fourth consecutive hold confirmed on April 29, 2026 (Bank of Canada policy decision, April 29, 2026). This guide is the practitioner-grade synthesis a lender, owner, lawyer, or asset manager needs to read a 2026 Ontario commercial valuation correctly.
Key Takeaways
- The Canadian national all-properties average cap rate was 6.61% in Q1 2026 per CBRE - the spread over the 10-year Government of Canada bond was 317 bps, tighter quarter-over-quarter.
- The Bank of Canada has held the overnight rate at 2.25% through four consecutive decisions, anchoring 2026 cost-of-debt expectations and shaping the back-end of the 2021 five-year refinance wall.
- Office is bifurcating, not collapsing: Downtown Class AA cap rates compressed 25 bps quarter-over-quarter to 6.59% in Q4 2025 per Altus - the largest single-quarter Class AA compression in over 13 years - while suburban Class B and tertiary markets remain wide.
- The Kitchener-Waterloo envelope (CBRE Q4 2025): Downtown Office A 6.00-6.75%, Industrial A 5.75-6.50%, Multifamily High Rise A 4.25-4.75%. KW has no Downtown Class AA series in the CBRE national report - it is a Class A market.
- Southwestern Ontario industrial availability decreased 40 bps year-over-year to 7.2% in Q1 2026 per Altus - the only major regional industrial segment that improved against the national trend.
- Cambridge- and Guelph-specific cap rates are not separately published in any of the canonical national reports - they roll up into CBRE's Kitchener-Waterloo bucket and Altus's Southwestern Ontario block.
A cap rate measures one year of stabilized income against price, and it is the single most-cited valuation summary in 2026 Ontario CRE.
A capitalization rate - what is a cap rate in plain terms - is the ratio of a property's stabilized net operating income to its market value or transaction price: Cap rate = NOI / Value. It is the most-used summary statistic under the income approach as codified in CUSPAP 2026, the Canadian Uniform Standards of Professional Appraisal Practice, mandatory for all Appraisal Institute of Canada (AIC) member assignments completed on or after April 1, 2026.
A cap rate is not a discount rate. Reading one correctly requires distinguishing the going-in cap rate (year-one stabilized NOI at acquisition) from the terminal (or reversion) cap rate (assumed exit-year cap rate that derives reversion value within a DCF). Headline numbers from CBRE, Altus, Colliers, Avison Young, JLL, and Cushman and Wakefield are going-in cap rates from completed transactions and active investor feedback. The spread - cap rate minus the 10-year Government of Canada bond yield - was 317 bps in Q1 2026 per CBRE; spread is what most lenders and institutional investors track to assess risk pricing against the risk-free benchmark.
The Canadian Q1 2026 national average sits at 6.61% and Ontario's headline numbers fall in a wide band around it.
The CBRE Q1 2026 report (April 21, 2026) places the Canadian all-properties national average at 6.61%, a 2 bps decrease quarter-over-quarter from Q4 2025's 6.63% (CBRE Q4 2025 PDF). The Altus four-asset benchmark OCR was 5.92% in Q4 2025, flat quarter-over-quarter (Altus Group Q4 2025 Canadian CRE Investment Trends Survey, January 20, 2026). The two series differ by composition; both are widely cited. The table below summarises Q4 2025 CBRE cap rate ranges for the three Ontario markets CBRE tracks by name - Toronto, Kitchener-Waterloo, Ottawa - alongside the national benchmark.
| Asset class | Toronto (CBRE Q4 2025) | Kitchener-Waterloo (CBRE Q4 2025) | Ottawa (CBRE Q4 2025) | Canada national avg |
|---|---|---|---|---|
| Downtown Office Class AA | 5.25 - 7.75% | N/A (no AA series) | 6.25 - 6.50% | 6.88% (CBRE) / 6.59% (Altus) |
| Downtown Office Class A | 6.25 - 7.00% per CBRE Q4 2025 (verified 2026-05-21) | 6.00 - 6.75% | 6.75 - 7.75% | - |
| Downtown Office Class B | 6.75 - 7.50% per CBRE Q4 2025 (verified 2026-05-21) | 6.50 - 7.25% | 7.50 - 8.50% | - |
| Suburban Office Class A | 7.25 - 8.25% per CBRE Q4 2025 (verified 2026-05-21) | 6.50 - 7.50% | 7.50 - 8.50% per CBRE Q4 2025 (verified 2026-05-21) | - |
| Suburban Office Class B | 8.00 - 9.00% per CBRE Q4 2025 (verified 2026-05-21) | 7.00 - 7.75% | 8.25 - 9.00% per CBRE Q4 2025 (verified 2026-05-21) | - |
| Industrial Class A | 5.00 - 5.25% | 5.75 - 6.50% | 5.50 - 6.00% per CBRE Q4 2025 (verified 2026-05-21) | 5.91% |
| Industrial Class B | 5.25 - 6.00% | 6.00 - 7.00% | 6.25 - 6.75% per CBRE Q4 2025 (verified 2026-05-21) | 6.42% |
| Multifamily High Rise A | 3.85 - 4.75% per CBRE Q4 2025 (verified 2026-05-21) | 4.25 - 4.75% | 4.50 - 5.00% per CBRE Q4 2025 (verified 2026-05-21) | 4.44% |
| Retail Strip (anchored) | 5.00 - 6.00% per CBRE Q4 2025 (verified 2026-05-21) | 5.50 - 6.35% | 6.25 - 6.75% per CBRE Q4 2025 (verified 2026-05-21) | - |
| Retail Power Centre | 5.75 - 7.00% per CBRE Q4 2025 (verified 2026-05-21) | 6.00 - 6.50% | 6.25 - 6.75% per CBRE Q4 2025 (verified 2026-05-21) | - |
| Retail Regional | 5.25 - 7.00% per CBRE Q4 2025 (verified 2026-05-21) | 6.00 - 6.50% | 6.00 - 6.50% per CBRE Q4 2025 (verified 2026-05-21) | 6.44% (Tier I - Altus) |
Sources: CBRE Q4 2025 Canadian Cap Rate Report PDF (extracted and verified 2026-05-21 from CBRE Q4 2025 PDF); Altus Group Q4 2025 Canadian CRE Investment Trends Survey. National Multifamily figure is CBRE High Rise A. National Tier I regional retail figure is Altus.
The asset-class breakdown shows office bifurcating, industrial plateauing, multifamily holding tight, and retail re-rating selectively.
Office - flight-to-quality, largest Class AA compression in over a decade
Downtown Class AA office (national average) compressed 25 bps quarter-over-quarter to 6.59% in Q4 2025 per the Altus Q4 2025 ITS - the largest single-quarter Class AA compression in over 13 years. Toronto Class AAA vacancy sat below 2% per Altus even as overall Toronto office availability was 15.5% in Q1 2026, down 270 bps year-over-year, with six consecutive quarters of positive net absorption downtown (Altus Q1 2026 office market update, April 22, 2026). The intra-class gap is widening: an AAA / Trophy versus standard Class A delta now surfaces in CBRE and Altus. Suburban and tertiary Class B remains wide - Ottawa Downtown Class B at 7.50-8.50% sits at the wide end, with Ottawa office availability up 170 bps year-over-year to 14.2% in Q1 2026. See our GTA office cap rate compression analysis.
Industrial - yields plateaued nationally, Southwestern Ontario improved against trend
Canadian Industrial Class A was 5.91% and Class B 6.42% in Q4 2025 per CBRE (combined 6.16%, –3 bps QoQ). Toronto Industrial Class A at 5.00-5.25% is the tightest industrial print of any major Canadian market. National industrial availability rose to 6.2% in Q1 2026 (+40 bps YoY per Altus), while JLL Canada Industrial Q1 2026 recorded national vacancy of 5.1% - the first decline since 2022 (Altus measures availability incl. sublet; JLL measures vacancy). Southwestern Ontario was the standout: industrial availability 7.2% in Q1 2026, down 40 bps year-over-year per Altus - the only major regional segment that improved against trend. See Ontario industrial cap rate trends.
Multifamily - tightest cap rates in any asset class
Canadian Multifamily national average was 4.43% in Q4 2025 per CBRE (High Rise A 4.44%, High Rise B 4.78%, Low Rise A 4.68%, Low Rise B 4.91%, New Construction 4.63%). Altus suburban multiple-unit residential was 4.66% (+2 bps QoQ). Kitchener-Waterloo Multifamily High Rise A at 4.25-4.75% sits at or below the national average - structural rental demand in the KW-CMA.
Retail - selective re-rating, food-anchored strip leading
Tier I regional malls were 6.44% in Q4 2025 per Altus (+9 bps QoQ). Food-anchored retail strip in Toronto, Montreal, and Edmonton has led Altus's top product-market combinations for eight consecutive quarters. Kitchener-Waterloo Strip (anchored) at 5.50-6.35% is among the tighter retail prints in the KW envelope, reflecting that thesis.
Geography matters: Toronto, Kitchener-Waterloo, and Ottawa have published city-level data; Cambridge, Guelph, and most Southwestern Ontario markets roll up.
Greater Toronto Area (GTA)
Toronto is the deepest-data Ontario market. Downtown Class AA office at 5.25-7.75% reflects a wide intra-AA range from Trophy versus standard AA bifurcation. Industrial Class A at 5.00-5.25% is the tightest industrial print of any market CBRE tracks. The GTA has the largest industrial pipeline at 9.8M sf under construction in Q1 2026 per Altus, against Q1 2026 industrial availability of 5.1%. Toronto sits in Altus's top three momentum markets alongside Halifax and Vancouver.
Kitchener-Waterloo
KW is among the most data-rich tertiary markets in Canada because CBRE tracks it explicitly. Q4 2025: Downtown Office A 6.00-6.75%, B 6.50-7.25%; Suburban Office A 6.50-7.50%, B 7.00-7.75%; Industrial A 5.75-6.50%, B 6.00-7.00%; Retail Regional 6.00-6.50%, Power 6.00-6.50%, Strip 5.50-6.35%; Multifamily High Rise A 4.25-4.75%. KW has no Downtown Class AA series - it is a Class A market with no AA, an asymmetry invisible in national headlines. See our Kitchener-Waterloo commercial market report; this is the heritage market of our Kitchener-Waterloo practice.
Cambridge and Guelph (rollups)
Cambridge cap rates are not separately tracked - Cambridge rolls up into CBRE's Kitchener-Waterloo bucket and into Altus's Southwestern Ontario industrial block. Guelph is likewise not a CBRE-tracked market and is closest in profile to the KW and London rollups. A practitioner valuing a Cambridge or Guelph asset must triangulate from the KW envelope, the Southwestern Ontario figures, and direct-comparison evidence from local transactions.
Ottawa, Southwestern Ontario, Hamilton, London
Ottawa Downtown Class AA office at 6.25-6.50% Q4 2025 sits wider than Toronto Class AA on the tight end; Ottawa office availability rose 170 bps year-over-year to 14.2% in Q1 2026, driven by shadow vacancies and PSPC disposal-plan adjustments. Southwestern Ontario industrial availability improved against trend at 7.2% in Q1 2026, down 40 bps year-over-year, with Q1 2026 completions of 3 buildings totalling ~424,000 sf, ~75% available. Hamilton and London city-level cap rates are not as systematically published as Toronto, KW, or Ottawa - any Hamilton or London valuation requires direct-comparison evidence alongside the regional rollups.
2026 movement is driven by the Bank of Canada hold at 2.25%, the 2021 refinance wall, and selective capital flows into higher-quality assets.
The Bank of Canada held the overnight rate at 2.25% on April 29, 2026 - the fourth consecutive hold (Bank Rate 2.5%, deposit rate 2.20%) - after cutting a cumulative 100 bps through 2025 per CBRE Q4 2025 commentary. The hold anchors the cost-of-debt environment for refinances and acquisitions, holds the 10-year Government of Canada bond yield approximately flat quarter-over-quarter (CBRE Q1 2026), and supports the 317 bps spread between cap rates and the bond - a spread that tightened quarter-over-quarter, signalling investor willingness to compress risk premia on quality assets. Colliers Q1 2026 commentary flags the alternative path - rate increases later in 2026 if inflation reasserts - so practitioners should not embed a 2.25% terminal rate into terminal-cap-rate construction without explicit disclosure of the rate-path assumption.
2026 is also the back-end of the 2021 five-year refinance wall. Properties acquired in 2021 at sub-4% cap rates with 2021 debt are resetting at 2026 spreads, producing the bid-ask gap Altus Q4 2025 flagged as the central friction in transaction velocity - 2025 total Canadian CRE investment volume was approximately $51 billion, an 8% year-over-year decrease. Altus expects the gap to narrow into 2026. Capital flows are selective: Altus's Q4 2025 top three momentum markets were Halifax, Vancouver, and Toronto (Halifax surpassing Vancouver for the first time in the series), and Trophy office in downtown Toronto continues to attract bids at sub-6% pricing despite the broader availability picture. For the lender-underwriting view of this dynamic, see our Canadian CRE refinance cycle 2026 analysis.
Cap rate shifts move commercial valuations by simple arithmetic - and the arithmetic compounds in the income approach.
A cap rate is the denominator of the income approach: Value = NOI / Cap rate. On a property generating $1.0M of stabilized NOI, a 6.00% cap rate implies a value of $16.67M; at 6.25% the value falls to $16.00M; at 5.75% it rises to $17.39M. A 25 bps differential moves value by roughly 4% with NOI held constant. In a DCF, the terminal cap rate produces a reversion value that often represents 50-70% of total present value over a 10-year hold - a 50 bps terminal move can shift implied current value by 6-10%. This is why CUSPAP 2026 work requires defending both going-in and terminal cap rate assumptions independently; the terminal rate must reflect a defensible view of the year-(N+1) market environment, not the going-in rate plus a generic spread. For the longer treatment, see how cap rates affect commercial valuation.
Frequently asked questions
What is the average commercial cap rate in Ontario in 2026?
There is no single Ontario-wide cap rate average published. The Canadian national all-properties average was 6.61% in Q1 2026 per CBRE. Within Ontario in Q4 2025: Toronto Downtown Class AA office 5.25-7.75%, Kitchener-Waterloo Downtown Class A office 6.00-6.75%, Ottawa Downtown Class AA office 6.25-6.50%. The right number depends on asset class and submarket.
Are Ontario commercial cap rates going up or down in 2026?
Mixed by asset class. Downtown Class AA office compressed 25 bps quarter-over-quarter in Q4 2025 (largest in over 13 years per Altus). Industrial plateaued in the high-5% / low-6% range. Multifamily held tight at sub-5%. Tier I regional retail expanded 9 bps quarter-over-quarter per Altus. The Q1 2026 CBRE national headline moved 2 bps lower to 6.61%. The macro direction is stabilization, not uniform movement.
What is a good cap rate for commercial property in Ontario?
"Good" depends on perspective. A buyer wants higher (lower price for the same NOI); a seller wants lower. The relevant benchmark is the asset's specific cap rate range from the most recent CBRE or Altus quarterly versus the asset's own NOI quality, lease term, and risk profile. A Toronto Industrial Class A asset transacting at 5.25% sits at the wide end of its CBRE range and is defensible underwriting; a Kitchener-Waterloo Class B office at 7.50% is at the wide end of its range and priced to reflect that.
Why are GTA office cap rates compressing in 2026?
Flight-to-quality. Toronto Class AAA / Trophy vacancy was below 2% per Altus Q4 2025 even as overall Toronto office availability sat at 15.5% in Q1 2026 (down 270 bps year-over-year). Six consecutive quarters of positive net absorption downtown concentrated demand in the top of the office stack, producing the 25 bps Downtown Class AA compression in Q4 2025. Suburban Class B and tertiary markets are not compressing - they remain wide.
Where can I find Cambridge or Guelph commercial cap rates?
Cambridge and Guelph cap rates are not separately published in any of the canonical national reports. Cambridge rolls up into CBRE's Kitchener-Waterloo bucket and into Altus's Southwestern Ontario industrial block. Guelph is closest in profile to the KW and London Southwestern Ontario rollups. Practitioners valuing Cambridge or Guelph assets triangulate from the KW envelope, the Southwestern Ontario figures, and direct-comparison evidence from local transactions - the published national figures are scaffolding, not a comp set.
Further reading
- what is a cap rate - the canonical definition, formula, and going-in versus terminal distinction.
- how cap rates affect commercial valuation - the arithmetic of the income approach and DCF reversion.
- GTA office cap rate compression - the Q4 2025 25 bps Class AA move and the flight-to-quality narrative.
- Kitchener-Waterloo commercial market report - the KW envelope by asset class, named buildings and parks.
- Ontario industrial cap rate trends - the Toronto-tight, Southwestern-Ontario-improving cross-Ontario picture.
- Canadian CRE refinance cycle 2026 - the 2021 five-year wall, the bid-ask gap, and lender underwriting context.
Commission an Ontario commercial appraisal. If you need a CUSPAP 2026-compliant commercial appraisal grounded in the Q1 2026 data above and signed by an AACI-designated practitioner, request an appraisal. We serve Ontario from our Kitchener-Waterloo practice, founded in 1973.
Update log: 2026-05-14 - Initial publication. Cap rate figures verified against CBRE Q1 2026 (April 21, 2026), CBRE Q4 2025 cap rate PDF, Altus Group Q4 2025 ITS (January 20, 2026), Altus Q1 2026 office update (April 22, 2026), Altus Q1 2026 industrial update (May 1, 2026), Bank of Canada April 29, 2026 rate decision, Colliers Canada Q1 2026, and JLL Canada Industrial Q1 2026. Will be updated when CBRE Q2 2026 and Altus Q1 2026 ITS are published. 2026-05-21 - Toronto and Ottawa cap rate rows (Downtown A/B, Suburban A/B, Industrial A/B, Multifamily HR A, Strip, Power, Regional) populated from CBRE Q4 2025 Canadian Cap Rate Report PDF.
