Investor Confidence Holds Steady in Canada's Multi-Suite Residential and Commercial Real Estate Markets in Q2 2025: Morguard
"Canada's real estate market continues to be supported by solid fundamentals that foster long-term optimism and growth," said Angela Sahi, President and Chief Operating Officer of Morguard. "Even amid market volatility, investor interest in high-quality industrial and office properties remains strong."
Multi-Suite Residential Real Estate
Multi-suite residential rental transaction volume rose in the second quarter after a slower start to the year. A total of $812.0 million in transaction volume was reported, marking a 39.4% increase quarter-over-quarter. Investor sentiment remained positive, driven by the asset class's healthy medium- to long-term fundamentals and its proven ability to perform during periods of economic softness.
While rental demand is expected to moderate in the coming quarters, partly due to lower immigration and temporary worker targets and increased first-time homebuyer activity, asking rents are projected to climb through next year as newly constructed supply enters the market.
Commercial Real Estate
High-quality industrial opportunities, such as logistics and warehouse properties, remained highly attractive to investors. Approximately half of the industrial properties sold were purchased by users, many of whom opted to buy space instead of paying elevated lease rates. Private capital groups also remained active by targeting acquisition opportunities in a less competitive market.
The Canadian office leasing market remained relatively stable in the second quarter. Trophy assets remained popular among tenants seeking highly-amenitized spaces in core locations. Office rents were also relatively stable with modest upward pressure reported for space in trophy buildings.
Retail investment activity moderated in the second quarter following a strong start to the year. Several large transactions were completed earlier in 2025, and sales of retail properties have remained surprisingly brisk over the past year.
Economic Factors
Canada's economy showed signs of cooling in the second quarter, following a stronger-than-expected performance earlier in 2025. Trade disruptions and tariff pressures weighed on job creation, consumer spending, and business investment. Despite these headwinds, core inflation remained largely under control. Looking ahead, the Bank of Canada will face the challenge of balancing support for economic growth with its mandate to maintain price stability.
"While global economic conditions continue to evolve, the Canadian real estate market is showing encouraging signs of stability," said Keith Reading, Senior Director, Research at Morguard. "With balanced fundamentals and continued investor interest in core sectors, the outlook for the second half of 2025 remains positive."
Released today by Morguard, the 2025 Canadian Economic Outlook and Market Fundamentals Second Quarter Update provides a comprehensive breakdown of the real estate investment trends and outlook to watch in Canada. The full report is available at morguard.com/research.
Investor interest in multi-suite residential rental assets remained strong, supported by healthy fundamentals.
Office leasing market conditions stabilized, with demand focused on high-quality and amenity-rich buildings.
Industrial availability rose with the delivery of new supply while user and investor interest in space for logistics remained firm.
The Bank of Canada will need to strike a balance between supporting economic growth and maintaining inflation stability amid ongoing trade uncertainty.
About Morguard Corporation
Morguard Corporation is a major North American real estate and property management company. It has extensive retail, office, industrial, hotel and residential holdings owned directly and through its investment in Morguard Real Estate Investment Trust and Morguard North American Residential REIT. Morguard also provides real estate management services to institutional and other investors. Morguard's owned and managed portfolio of assets is valued at $19.1 billion. This year, Morguard proudly celebrates 50 years of leadership, innovation, and growth in the real estate industry.
For more information, visit www.morguard.com or follow us on LinkedIn and Instagram.
Forward Looking Statement Disclaimer
Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continue," "estimate," "expects" and "will" and words of similar expression, constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and regionally; changes in business strategy; financing risk; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted; and other factors. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Publisher does not assume the obligation to update or revise any forward-looking statements.
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