Economic uncertainty amid ongoing trade wars drives tactical shift in Canada's top commercial markets in 2025, says REMAX Canada

Cision Canada

11-06-2025

TORONTO, /CNW/ -- Investors are capitalizing on opportunities that allow for strategic repositioning, adaptive reuse and targeted investment throughout the country, as escalating global trade tensions, economic concerns and evolving market conditions weigh on sentiment, according to a report released today by REMAX Canada.
REMAX Canada's 2025 Commercial Real Estate Report examined first-quarter activity across 12 major markets from coast to coast and found that Canada's commercial landscape continues to evolve as investors and asset holders adapt acquisitions and asset management plans to optimize portfolios and performance against a changing climate. Multi-family and industrial were the top-performing asset classes, followed by retail. Commercial markets continue to move forward at a steady pace, fuelled by ongoing pressure on the country's existing housing stock, government policies set to advance growth such as the Housing Accelerator Fund, and a continued upswing in e-commerce sales.
Western Canada's commercial markets, alongside Newfoundland-Labrador, led the country in terms of commercial growth in 2025, buoyed by an increase in population, greater investment activity, and solid economic performance. Steady immigration and interprovincial migration in Alberta, Saskatchewan and Manitoba helped spur expansion, with shortages reported in several asset classes, while Newfoundland-Labrador's growing pipeline of resource and infrastructure projects is helping the province enter a period of renewed economic momentum.
"Canada's commercial real estate market is shifting to fundamentals this year," says Don Kottick, President, REMAX Canada. "What we're seeing is a pivot to purpose and practicality, prompting revitalization, a flight to quality, and a more discerning buyer pool. Institutional investors and Real Estate Investments Trusts (REIT) are cautiously re-entering the market—focused on acquisition, not disposition—as they target assets that promise long-term value in today's more complex operating environment."
To illustrate, Oxford Properties Group recently invested $730 million to acquire 50 per cent interest in seven office towers in Vancouver and Calgary, identifying now as an opportune time to rotate capital back into this asset class.
Population growth continues to propel the multi-family asset class, explains Kottick. Bolstered by public policy, both private and public investment is driving a resurgence in the construction of purpose-built rentals nationwide, while demand remains strong for existing portfolios. Industrial is the backbone of the commercial sector, with growing strength in the country's logistics corridors. While smaller, traditional malls continue to experience challenges, overall retail is resilient, with neighbourhood nodes outperforming, especially those anchored by essential shops and services. Although growing pains are expected, commercial markets are ultimately positioned for growth once the market shakes current transitory challenges and clarity emerges.
The most resilient and opportunity-rich markets are those where investors are proactively reshaping aging or underused assets to align with present and future demand.
Key Canadian commercial real estate trends:
Office/retail-to-residential conversions continue, yet at a slower pace. Calgary and Ottawa continue to lead the country in terms of office-to-residential conversions.
Calgary has 11 downtown office conversion projects approved and at least 20 buildings purchased for further redevelopment. Ottawa has completed several conversions and has more underway, with the federal government repurposing outdated federal office buildings. In London, the city has launched an office-to-residential CIP incentive program, with one project nearing completion and another approved.
Core vacancies in Winnipeg's office buildings have promoted conversions, with the Medical Arts Building showing early adaptive reuse success. Adaptive reuse is picking up in Halifax as non-profits and developers are converting office space to meet growing demand for senior and student housing.
Retail malls such as Eastgate Square in Hamilton are undergoing transformation into mixed-use residential-retail developments, as the market responds to oversupply and changing consumer preferences.
Grocery-anchored retail centres remain a preferred asset for private and public investors. Retail plazas continue to outperform, especially in suburban areas, making this asset class attractive to investors, particular in Ottawa, Halifax, Winnipeg, Edmonton and the Greater Toronto Area (GTA). In addition to improving cash-flow, these assets offer future mixed-use redevelopment and/or intensification potential.
The mall experience continues to transition. Foot traffic continues to diminish in older, dated shopping malls, with management introducing more service-related retail to their tenant mix, and some planning future residential development. Vibrant neighbourhood retail nodes are filling the void, offering a curated mix of retailers, services, dining, healthcare and beauty options, popular with both locals and tourists.
Mid-market industrial with flex-space is popular with owner-occupiers in markets across the country. Demand for logistics, trades and manufacturing businesses remain high in markets including Calgary, Edmonton, Saskatoon and Winnipeg, with smaller flex industrial properties with one or two offices and warehouse space, proving ideal for owner-users and coveted by investors for steady rental income.
Values of farmland and agri-industrial properties in Saskatchewan continue to spike. The province continues to lead the country in price growth, with the overall farmland market climbing 13.1 per cent over 2023 levels despite inclement weather that impacted yields and commodity prices, according to Farm Credit Canada's 2024 Farmland Values Report released in March 2025. Amalgamation of farming operations continues unabated. Meanwhile, investor demand has tapered as some cash in their gains, given lower commodity prices, recent changes to capital gains tax and tariffs imposed by China—the province's largest customer of Saskatchewan-grown canola and peas.
Older multi-family building portfolios attract capital. In markets such as Greater Vancouver, Hamilton, Saskatoon and Halifax, REITs, institutional and smaller investors are activity pursuing aged multi-family assets that require revitalization, trade below replacement cost, and offer solid returns by rent optimization following modest renovation to boost curb appeal and the tenant experience.
Senior and student housing needs continue to climb, despite the decline in international students, fueling demand for affordable accommodations. Conversion and repurposing of office buildings and renewed construction of purpose-built rentals offer solutions to the housing deficit, particularly in large urban centres including Toronto, Ottawa, London and Halifax.
REMAX noted that government policy including the Housing Accelerator Fund (HAF) has supported the recent upswing in multi-unit purpose-built rentals development. In fact, the federal government has earmarked an additional $74 million to top-performing Housing Accelerator Fund communities to fast-track construction of 112,000 new homes by 2028, by ending restrictive zoning, accelerating permits and advancing densification near transit and post-secondary institutions. Over the next decade, the program is forecast to create 750,000 new homes for people in towns, cities and indigenous communities across Canada. Yet, more stimulation is needed to address Canada's housing crisis. The reintroduction of the popular Multiple Unit Residential Building (MURB) tax credit, directly responsible for the construction of close to 200,000 rental units in the 1970s, would further aid in expediting growth.
At present, investors are revisiting the value proposition in select markets. Development has stalled in cities such as Vancouver, where high interest rates and elevated construction costs have upended the value proposition and the viability of previously planned projects. More stimulus is required against a backdrop of increased distressed sales of condominium development. Falling land values in the city have developers recalibrating, weighing the prospect to sell at a loss or hold until values recover while servicing mortgage debt and absorbing negative cash flow. Demand for development land has slowed as a result, with interest now shifting to income-generating properties that can ride out current headwinds.
"Land is no longer just about future potential—it's about present performance; it's about cash flow," says Kottick. "Increasingly, investors value properties that deliver steady rental income to help portfolios weather market volatility and economic uncertainty."
Industrial and multi-family asset classes have both experienced a serious upswing in inventory levels over the past year. An influx of new industrial product has softened absorption rates nationwide, prompting some tenants to pursue retrofits of older properties with lower lease rates. The same dynamic is playing out in multi-family markets, where increased inventory has eased rent pressures and pushed vacancy rates upward in traditionally tight markets like the GTA and Vancouver where vacancies are now climbing.
"An increase in inventory has helped to stabilize rental rates for housing in major markets," says Kottick. "However, the uptick in new industrial product has slowed absorption rates and bolstered competition for older stock in markets such as Halifax, as tenants opt to retrofit existing product, rather than pay a 25-per-cent premium for newer units."
Despite economic headwinds amid trade tensions, Canadian cities and towns have become increasingly popular destinations among Canadian and international tourists alike. As a result, major hotel chains are ramping up investment in key regions:
Hilton will surpass 200-properties with 11 new openings in Ontario, Alberta and British Columbia.
Marriott is expected to expand its portfolio in Alberta, British Columbia, Ontario and Atlantic Canada.
Hyatt plans to double its Canadian footprint by 2026 with 23 new hotels.
Saskatoon is seeing an uptick in existing hotel sales, as concerns over the cost of new builds has smaller investors gravitating to existing hotel properties.
"Fundamentals are now driving decision-making and creative approaches to unlocking new value," says Kottick. "The opportunities are there—for those that are prepared to rethink, reinvest and reposition. The good news is investors tend to easily adapt, pivot and embrace flexibility—an art in and of itself and a primary factor underpinning resilience in Canada's commercial market. As a result, activity is expected to remain stable, regaining further momentum once economic performance improves."
Market-by-Market Overview
Greater Vancouver Area
While 2025 was expected to be a year of recovery for Greater Vancouver's commercial real estate market, tariff wars and recession fears prompted investors to shift into preservation mode, making strategic adjustments to their holdings that allow for maximum flexibility.
There has been some year-over-year improvement reported in areas including office and industrial leasing, with dollar volume transactions in the first quarter of 2025 up 10 per cent to $2 billion, according to Altus Group's Vancouver Q1 Report. Bolstered by a substantial decrease in Class-A space, overall office vacancy rates in the downtown core have dropped almost one percentage point, now hovering at 10.7 per cent.
Flight to quality drives office absorption
Coveted trophy towers are leading in increased absorption rates. The flight to quality office space is especially evident in downtown Vancouver where the vacancy rate for Class A office has fallen to 8.6 per cent. There has been some consolidation and upgrading in the triple-A space as corporations adapt to new synergies in the hybrid workplace with a vision of creating a culture. Demand for B- and C-class office space remains tepid, with most of the available space obsolete and in dire need of an overhaul. Some B-class buildings, especially those with heritage value, may be revitalized if governments were prepared to offer grants or loans to investors for improvements. While there have been some conversions taking place in the city—the most notable being 111 West Hastings— there appears to be some reluctance, given that not all buildings are suitable for repositioning. However, as the population in the Vancouver CMA continues to climb, office conversions are expected to gain momentum as demand for housing accelerates further.
Land sales face economic reality check
Vacancy rates for purpose-built rentals have moved higher, but remain low at 1.6 per cent, according to the Canada Mortgage and Housing Corporation (CMHC) Fall 2024 Report, further underscoring the importance of continued development. There has been an uptick in court-ordered land sales as higher interest rates combined with a substantial increase in construction material and labour costs hindered several high-profile developments in the city this year, including four large strata properties in April. Development sites—either empty lots or those with existing apartments whose highest and best use would be redevelopment—have experienced a steep contraction in values since 2022 as eroding market conditions no longer support projected profit margins. It's a catch-22 situation for developers in this asset class, determining whether to sell at a loss or hold until values recover while servicing mortgage debt and absorbing negative cash-flow. Demand for development land has slowed as a result, with interest now shifting to properties that can generate good rental income while riding out current economic headwinds.
With the influx of new rentals, existing landlords are offering potential tenants a free month's rent and other inducements to fill their vacancies. Some smaller multi-unit investors are investing in their properties, retrofitting tired older buildings by enhancing curb appeal and undertaking improvements to lobby areas, elevators, lighting and HVAC systems. The proactive approach may serve to attract more tenants in years to come, particularly if the rental units are well-priced.
Institutional confidences returns
Institutional investors and Real Estate Investment Trusts (REIT) have also returned to the markets with an eye to buy. Vancouver remains one of the top three preferred markets by investors across all asset classes, according to a recent investment report by Altus Group. Food-anchored retail strips, suburban multiple-unit residential, and multi-tenant industrial were the most sought-after property types. Foreign investment has resumed as the weak Canadian dollar and higher cap rates attract German and U.S investors in the office sector.
Both urban and suburban retail continue to hold their own, with vacancy rates at 3.4 per cent and 0.7 per cent respectively. Retail shopping plazas with grocer anchors continue to be the city's most resilient asset class. The future potential of these plazas in terms of long-term multi-use development is irresistible, but product is few and far between. While malls are grappling with empty space at present, future redevelopment opportunities will substantially increase value down the road.
Industrial is still tight, but with more than 2.1 million square ft. of new supply introduced to the market in the first quarter of the year, upward pressure on availability rates has been noted in the market. According to Altus Group, availability levels jumped from 4.2 per cent in Q1 2024 to six per cent in the first quarter of 2025, edging up substantially as new construction is completed. Once sought-after industrial condos, including smaller units with storage capacity, are increasingly difficult to re-sell, with fewer owner-occupiers interested in condo industrial.
Although headwinds created by economic uncertainty persist, the weaker dollar is drawing some capital back into the market. However, most deals on the table today in the Greater Vancouver Area are necessity driven, with leasing activity outpacing sales of commercial product. Greater certainty would make a difference, with clarity resting on our success in trade negotiations with the U.S. Until then, lenders will remain cautious with approvals taking far longer to process for all asset classes. As interest rates decline, the process is expected to improve. Vancouver remains one of the most robust commercial markets in the country, and while tariffs have cast a temporary shadow, lower interest rates and a resolution on U.S. tariffs should prompt a rebound in the latter half of the year.
Edmonton
In the absence of larger institutional players in Edmonton's multi-family asset class, mid-size investors and private buyers are playing an increasingly important role in city's expansion.
Buoyed by ongoing population growth, multi-unit residential properties continue to be Edmonton's strongest sector. Private developers, in partnership with local government, are committed to increasing the city's rental housing stock in areas close to the University of Alberta, McEwan and Concordia as demand continues to exceed supply. According to Statistics Canada's Annual demographic estimates, census metropolitan areas and census agglomerations: Interactive dashboard, Edmonton's population topped 1.6 million in July 2024. Just over 72,500 new residents were welcomed between July 2023 and July 2024, an increase of almost five per cent. Tight market conditions continue to impact rental rates, with prices edging higher. In its May 2025 rental report, Urbanation Inc. and Rentals.ca Network data noted that Edmonton was one of only two major markets to report an upswing in rental rates that brought the average value for rentals to just over $1,500 a month.
Favourable funding available through the Canada Mortgage and Housing Corporation (CMHC) has also contributed to the upswing in multi-family construction in recent years through the federal government's Housing Accelerator Fund. Five-per-cent down payments, the ability to finance at favourable rates and longer amortization periods have incentivized many investors, although the inability to pull out equity and refinance projects has proven problematic to some.
A record number of purpose-built rentals were added to the market in 2024, relieving some of the pressure on the city's vacancy rate. A zoning by-law introduced in Edmonton in 2024, designed to improve affordability and accommodate population growth, has also encouraged the development of smaller investment properties with up to eight units on infill land in designated residential zones. The on-going effort to increase the city's housing supply is supported by Edmonton's Land Development team responsible for delivering residential land for sale in greenfield and infill neighbourhoods. Nine residential land development projects, in various stages from analysis to sales, are currently underway.
Retail redefines itself in the suburbs
Both institutional and private investors are behind robust demand for purpose-built retail centres in both new and established neighbourhoods. As the city continues to grow, there has been an uptick in demand, especially in newer suburban neighbourhoods, where there is a need for retail strip centres. Anchored by essential retail such as grocery or banks, the remaining tenant mix in today's retail centres has shifted from the past, with service-based retail including healthcare centres such as chiropractors, dentists, and physio, dominating the landscape.
High-traffic areas continue to resonate with smaller retailers who are willing to pay a premium for greater exposure, but prime locations are hard to find. Given the shift to online shopping, foot traffic in local malls has subsided in recent years, with a notable turnover in tenants. Future development projects are complementing some existing properties, as is the case with Mill Woods Town Centre. The property has been renovated, with a grocery store scheduled to open in August, while construction will begin on two 22-storey towers this year. West Edmonton continues to be a popular destination for local and out-of-province shoppers, now offering with 800 stores and services, 100 places to eat, two hotels and 12 attractions.
Industrial tightens; office market still lags
Logistics, manufacturing, energy-related businesses and support services are driving demand for industrial product throughout Edmonton and the surrounding communities. Availability rates continued to track downward in the first quarter of 2025, according to Altus Group, down .80 basis points from the same period in 2024. However, an influx of new product is expected to place upward pressure on vacancy rates in the latter half of the year. Acheson remains Edmonton's tightest industrial market, but with Parkland County rezoning parts of the industrial area to accommodate more light- and medium-use industrial, availability is expected to increase.
The office segment continues to be the weakest of all asset classes in Edmonton, with Altus Group placing availability rates at 19.7 per cent. The Stantec Tower and National Bank Centre (the former Manulife Place) continue to draw Class AA+ office tenants, while B- and C-class buildings are struggling to find prospective tenants. With some buildings half empty, landlords are offering lower lease rates and incentives, while others are offering month-to-month rentals. Unfortunately, despite these efforts, the occupancy is too low to make debt service coverage, despite an 80-per-cent return of remote and hybrid workers to the downtown core. Demand for office space is stronger in central Edmonton and is expected to strengthen further as urban sprawl continues.
Edmonton's commercial real estate market continues to be underpinned by strong economic fundamentals across a diverse array of sectors, including energy and sustainability, technology and innovation, health and life sciences, and agriculture. With a promising outlook in store for 2025, driven by robust population growth and significant investments in real estate and infrastructure, the city is expected to continue attracting investors.
Calgary
Robust immigration and interprovincial migration to the Calgary CMA in recent years have bolstered unprecedented expansion throughout the city's residential and commercial real estate markets. While the influx of new residents has slowed in recent quarters, supply shortages continue to exist across a multitude of commercial asset classes, including multi-family housing, which remains the top performer in Calgary, driven by REITs, institutional investors and out-of-province buyers. Almost 3,000 multi-family housing starts were reported by the City of Calgary in the first quarter of 2025, with purpose-built rentals representing nearly 65 per cent.
Existing apartment portfolio sales continue unabated, with 2024 confirmed "as the year of the multifamily in the Calgary market," reported by CoStar. Investors are buying up doors throughout the city as the housing crunch continues to strain supply. To illustrate, Boardwalk REIT closed on the Circle, a 295-unit rental building valued at almost $80 million, in January and acquired Elbow 5 Eight, a 256-unit apartment building in Windsor Park for $93 million. Another investor group recently purchased three Class A multi-family properties in Calgary comprised of 149 units for $87.5 million.
In its 2024 Rental Market Report, the Canada Mortgage and Housing Corporation (CMHC) reported vacancy rates for purpose-built rentals in the Calgary market sat at 4.8 per cent, with monthly rental rates for an average two-bedroom apartment rising almost nine per cent to just under $1,900. The recent influx of new inventory, however, has served to stabilize the market in recent months, with future rate hikes expected to be more tempered. Vacancy rates for similar condominium apartments are much tighter, with monthly rental rates approaching $2,000.
Office conversions gain ground
The need for residential housing is also propelling office conversions in Calgary's downtown core, with the city relaunching its Downtown Development incentive program last fall. Eleven downtown office conversions have been approved to date—with two completed—representing an additional 1,500 new units. At least 20 buildings have been purchased with an eye to conversion.
While absorption levels in the ailing office sector have increased, availability rates remained amongst the highest in the country at 20.7 per cent in the first quarter of 2025, down from 22.6 per cent during the same period in 2024, according to Altus Group. Class A buildings in the core continue to draw tenants away from older B- and C-class office space as the flight to quality continues. Incentivized larger and smaller tenants are making their moves, with several A-class office buildings now fully occupied.
Retail evolves with experience-driven format
Retail in the core is starting to benefit from increased residential, although the full impact is unlikely to be identified for several years when conversion projects are completed. New residential development on adjacent land over the past 10 to 15 years has supported the city's retail malls. Greater emphasis has now been placed on creating a destination for shoppers by mall management, with the addition of new restaurants, on-site recreational facilities including gyms and studios, as well as health and beauty services. CF Chinook Centres recently upped the ante, bringing in a new virtual reality experience to consumers with its Horizon of Khufu trip through the Great Pyramid of Giza with great success. The mall has since followed up with another virtual experience—Life Chronicles—that takes viewers through the ages. Both events will run through to the end of October 2025. The Hudson Bay Company's bankruptcy was a blip in the market with its space broken down and taken over by smaller retailers.
REIT and institutional investment continue to be noted in the Calgary area given long-term development potential, as evidenced by the purchase of a 50 per cent interest in the Seaton Gateway shopping centre in Calgary for $33.5 million last year.
Neighbourhood retail nodes throughout the city remain strong, with clusters of boutiques, restaurants, and cool retail shops attracting foot traffic. Retail space is particularly coveted in vibrant districts including Kensington, 17 th Avenue SW, Fourth St., and Inglewood, usually commanding top dollar with vacancies few and far between.
Calgary builds a logistics powerhouse
Industrial continues to expand in the Calgary area as the city position's itself as an inland port and distribution hub for Western Canada. A recent announcement by the City of Calgary and Rocky View underscores the commitment to develop what could be North America's strongest inland port. Still in its infant stages, the Prairie Economic Gateway project, located on city's eastern limits with access to rail lines, is forecast to generate over $7 billion in economic activity and create more than 30,000 jobs across the region over the next 10 to 12 years.
Smaller single-use properties with one bay, ranging from 1,500 to 2,000 square feet in size, continues to climb, yet inventory for both sale or lease is greatly diminished. Mid-market industrial product with over 30,000 square feet is also sought-after, but demand continues to outpace supply. Availability rates have edged upward for industrial product. Altus Group reported rates hovering at 6.9 per cent in the first quarter of the year, up from 5.8 per cent in Q1 2024—in large part due to new industrial developments coming on stream.
Alberta has quickly become an attractive hub for large-scale cloud-based and AI data centres, and demand is growing for land and industrial space to accommodate. Development of a $750 million data farm on the outskirts of Calgary was announced late last year, the third and largest in the province once completed. The province is actively pursuing a strategy to attract data center investments, aiming to secure $100 billion in investment over the next five years. Special considerations are necessary, as the establishment of data centres requires significant square footage and special zoning (municipal consultations and zoning approvals can take 6-12 months) as well as an application to the Alberta Electrical System Operator (AESO) for access to the grid (a process that can take 18-24 months).
Calgary's commercial real estate market continues to undergo a period of transformation, fueled by population growth, strategic investment and ongoing economic diversification. The multi-family sector continues to lead performance metrics, underpinned by tight vacancy rates, investor confidence, and increasing demand for rental housing. Downtown office conversions and a renewed focus on residential densification are reshaping the urban core, while the retail sector benefits from a rising local population and experiential trends. Industrial expansion remains robust, positioning Calgary as a critical logistics and distribution hub for Western Canada. Although external pressures such as trade tensions and rising interest rates present challenges, Alberta's resilient energy sector and GDP growth outlook provide a strong economic foundation. Collectively, these dynamics point to a maturing, opportunity-rich commercial landscape—one that is increasingly diversified, investor-friendly and positioned for sustained long-term growth.
Regina
Regina's robust population growth has fueled a surge in commercial real estate activity, with multi-family housing achieving its best performance in a decade in 2024. Momentum has spilled over into the first quarter of 2025, with demand for multi-unit apartments from out-of-province investors climbing yet again, despite rapidly depleting inventory levels.
Much of the growth in multi-family has been achieved through the federal government's Housing Accelerator Fund administered by the Canada Mortgage and Housing Corporation (CMHC). The program has breathed new life into the purpose-built rental market, encouraging investment through favourable interest rates and long-term amortization periods.
Institutional buyers throughout Canada continue to chase cash flow, driving investment in residential land parcels zoned multi-family. Most are seeking 1.5 acres or more, but limited availability has served to stifle activity. In the meantime, rental rates for apartments are high and continue to climb.
Businesses listed for sale have also experienced an uptick in recent years, with newcomers seeking to establish roots in the community. Regina placed 10 th in terms of annual demographic growth between July 2023 and July 2024, according to Statistics Canada's Annual demographic estimates, census metropolitan areas and census agglomerations: Interactive dashboard, bringing the total population to just over 282,000 with future growth anticipated in 2025.
Industrial adapts to new cost realities
Industrial leasing and sales in the city have been brisk this year, while demand for land has flatlined given higher construction costs. Sellers are adapting existing properties to fit new buyer's needs. Older buildings now selling for $2 million would cost $3.5 million to build under current circumstances, with soft costs throwing the equation off in the cost of construction. Lease rates remain stable at $12 to $13 per square ft. Industrial inventory is being absorbed quickly in the city, with almost all space expected to be leased by year end. Vacancy remains amongst the lowest in the country, hovering between two and three per cent, further demonstrating the stability of the overall market.
Suburban office space continues to thrive, with smaller and mid-size business choosing to locate out of the core where parking is abundant. Downtown office space, by comparison, remains the city's softest commercial asset class, with limited demand for space in virtually all building classes—A, B and C— despite attractive rental rates. The area is active during the day with crown buildings and large corporations rounding out the tenant mix, but offices empty out at 5:00 pm and limited foot traffic thereafter.
Retail moves out of malls and into the neighbourhood
The Cornwall Center, once a bustling mall with top retailers in the downtown core, has seen a steep post-pandemic climb in vacancy. The city's three other shopping malls are also facing growing vacancies, prompting some to diversify their tenant mix, including Southland Mall's incorporation of public library space. In contrast, vibrant neighbourhood retail nodes including Cathedral Village, Normanview Crossing, Albert Park and restaurants along 13 th Avenue, continue to resonate with shoppers, largely replacing the traditional mall experience.
Regina's commercial real estate market is poised for continued growth in the coming year, driven by favorable economic conditions, easing immigration policies, and sustained interest from institutional and foreign investors. Despite challenges such as trade tensions and limited land availability, the city's robust growth and government initiatives will continue to support its dynamic market.
Saskatoon
While economic uncertainty is causing some hesitancy in Saskatoon's commercial real estate market, year-over-year transactions were up in the first quarter of 2025, with a significant uptick noted in leasing activity. One hundred and seventy-six transactions occurred in the city, an increase of two per cent over the same period in 2024, even as tariffs, reduced immigration levels, and an undervalued Canadian dollar prompted many investors to hit the pause button.
Land and multi-family remain investor favourites
Sales of existing businesses are on the upswing, with liquor, hardware, and other essential retail and industrial experiencing strong demand, particularly with newcomers. Land development remains a popular asset class, with requests for an opinion on land valuations given steep increases in recent years. Most investors are seeking large tracts of land (10 acres plus) within 25 minutes of Saskatoon and zoned either residential or industrial, with prices ranging from $36,000 to $40,000 per acre. While shovel-ready developed land is available for sale, pricing can run as high as $300,000 per acre in Northeast Saskatoon; $180,000 to $300,000 per acre on the city's Westside; and $120,000 per acres in Dundurn.
Saskatoon's thriving residential market continues to attract both local and out-of-province investment, particularly from Ontario and British Columbia. Demand continues to outpace supply in the city, hampering homebuying activity, with just 451 properties currently listed for sale. Benchmark prices continue to escalate in response, according to the Saskatchewan Realtors' Association, rising almost two per cent to $422,600 in April over the previous high of $415,800 set in March 2025. Multiple offers are commonplace, with buyers scrambling to secure accommodations, making the case for greater development.
The multi-family asset class is performing well as a result, with occupancy rates for new apartment and townhouse complexes running at 100 per cent, and cap rates nearing nine per cent. Smaller investors are increasingly active in the market, in large part due to its lower price point. A quick glance at existing listings shows smaller, dated apartment buildings with four-to-six units priced from as low as $1.2 million, while more substantial properties offering 26 – 32 units can be purchased for under $4.2 million. Greater consideration is now being given to these properties in light of substantial increases in rental rates in recent years. According to Rentals.com and Urbanation, the lowest average asking rent for purpose-built and condo rental apartments in April was closing in on $1,500 a month in Saskatoon—up 9.7 per cent over April 2024 levels.
Retail and hotel markets steady
Residential growth continues to drive retail development in Saskatoon. With each new subdivision comes new retail centres anchored by grocery stores, banks, restaurants and other essential businesses. Bustling retail within the city's neighbourhood nodes including University Heights, Lawson Bridge, Midtown, Broadway, and 33 rd St., continue to attract both locals and visitors.
Investor appetite for hotel properties also remains strong, with five selling in recent months. Many of these are smaller hotel/motel-type properties with 80-plus rooms located outside city limits, servicing areas where accommodations are limited. Values typically ranges from $1 million to $5 million, but larger hotel product on the market can climb as high as $15 million. The city has not seen any new hotel development in at least five years. Financing, however, remains a challenge, with most lending institutions looking for as much as 50 per cent down on the proposed rental rate per room.
Vacancy rates in the industrial sector continue to edge upward as new industrial product comes to market. Rates currently hover at three per cent, up significantly over year-ago levels, while absorption levels have softened. While a limited number of owner-occupiers are seeking larger footprint industrial properties over 20,000 square feet, smaller industrial operations at 5,000 sq. ft. tend to sell quickly.
Farmland holds strong despite softer sales
Farmland remains a top performer, although fewer sales have occurred this year compared to last. Statistics from Farm Credit Canada's 2024 Farmland Values Report released in March 2025, showed Saskatchewan is leading the country yet again in terms of the percentage increase in farmland values in 2024, with price growth in the overall market climbing 13.1 per cent over 2023 levels. This, despite inclement weather that impacted crops throughout the year. Good quality land remains highly sought after, especially in East Central Saskatchewan in markets including Estavan where the price per cultivated acre can reach $3,800 and more. Well-irrigated land continues to draw top dollar, with values increasing year after year. On-going trends include the continued amalgamation of farming operations, while some investors are cashing in their gains considering lower commodity prices. Investor demand for rental land has tapered due to capital gains taxes and growing concerns over tariffs imposed by China, which continues to be the province's largest customer of Saskatchewan-grown canola and peas.
While downtown office space continues to struggle, there has been some moderate improvement in recent quarters, with the sale of the HSBC and Star Phoenix buildings. Post-pandemic recovery in the city centre is an on-going challenge, which has prompted an exodus of many of the area's retailers. Suburban A-class office buildings continue to experience healthy demand, with vacancy rates significantly lower than those in the core. Most sales and leasing are occurring in the Stonebridge business centre.
Saskatoon's commercial real estate market remains resilient amid broader economic headwinds. While factors such as tariffs, financing challenges, and shifting investor sentiment are influencing decision-making, overall activity continues to trend upward, driven by strong fundamentals across land development, residential, and the multi-family sectors. Investor interest in essential retail, industrial space, and farmland underscores a market that remains deeply rooted in necessity-based demand. Meanwhile, the persistent undersupply of housing and rising rental rates are pushing investors toward strategic opportunities. As the city navigates external pressures and local growth dynamics, Saskatoon's market continues to present attractive prospects.
Winnipeg
Winnipeg's commercial real estate market continues to gain traction, buoyed by sustained population growth and a renewed sense of energy across the city's industrial, multi-family and retail sectors. Over the past two years, the city's expanding population has sparked a level of activity not seen in recent memory, placing mounting pressure on available inventory and pushing both prices and competition higher.
Industrial and multi-family out front
At the forefront is the industrial sector, which remains the city's strongest performer. With vacancy rates amongst the lowest in the country at just under three per cent, demand for industrial space has intensified. Owner-occupiers represent the lion's share of activity, vying for prime space in business parks throughout the city and, to a lesser extent, its outskirts. Multiple offers are increasingly common in key submarkets, and leasing activity has accelerated, leading to steady year-over-year increases in lease rates. Although new industrial development is underway, the pace has slowed from year-ago levels. Supply of newer product is quickly absorbed, and recent transactions are reflecting moderately higher cap rates. Investment is prevalent, as demonstrated by the completion of a $25-million acquisition by Crestpoint Real Estate Investments Ltd. involving four industrial properties in Winnipeg's northwest quadrant in April, further underscoring continued investor confidence.
Closely following the industrial sector is the multi-family asset class, which has seen a resurgence in demand, particularly for purpose-built rentals. The trend is being driven by a diverse demographic, including younger renters, students, seniors and new Canadians, all of whom are contributing to increased pressure on the rental market. Proximity to educational institutions and access to waterfront are emerging as key preferences among prospective tenants. Both local and out-of-province investors have been exceptionally active in the city, quickly acquiring high-quality assets. To illustrate, NexLiving Communities' acquisition of a 50 per cent stake in a portfolio comprised of 169-suites across eight multi-residential apartments in May is a case in point. The remaining interest is held by Halifax-based VIDA, who will serve as property manager. Additionally, innovative partnerships with local non-profits have driven some new activity and enabled the introduction of creative offering such as lease-to-own programs, giving renters a pathway to ownership and contributing to social housing solutions.
The federal government's Housing Accelerator Fund has made new construction more viable by providing qualified developers with low-interest financing and extended amortization terms. The potential re-introduction of the Multiple Unit Residential Building (MURB) tax credit, as proposed in the federal Liberal election platform, could also provide significant incentives for further development in Winnipeg.
Retail diverges; nodes thrive, malls struggle
While industrial and multi-family real estate continue to thrive, the retail landscape presents a more nuanced picture. E-commerce has reshaped consumer habits, yet several neighbourhood retail nodes have remained resilient, including the Forks Market, Osborne Village, the Exchange District and West Broadway continue to be robust and offer unique shopping and dining experiences that draw both residents and visitors. New restaurants continue to open in these areas, and established venues are investing in renovations to maintain competitiveness. Newcomers have had a presence in the city's commercial market as well, buying up existing businesses to become owner-operators and, in the process, extending the city's mix of services, cuisine and cultural offerings. Investor interest remains high for well-anchored retail shopping plazas in the city's southwest and eastern retail corridors, though available inventory remains limited.
In contrast, larger regional shopping centres face greater headwinds. CF Polo Park, for example, is working toward broadening the tenant mix and repurposing existing space, but replacing legacy retailers such as the Hudson's Bay Company will prove challenging.
The office sector, meanwhile, lags other asset classes, with downtown vacancy rates remaining elevated. Although availability rates have improved marginally year over year at 15.2 per cent, vacant space remains widespread across Class A, B, and C buildings. Office conversions have occurred in the downtown core with the most notable makeover occurring to date at the Medical Arts Building. Suburban office space continues to be the outlier, benefitting from lower leases rates, ample parking and proximity to residential neighbourhoods—factors that appeal to small businesses adapting to hybrid and remote work models. Suburban vacancies remain significantly lower than those in the downtown core.
Despite the threat of U.S. tariffs, strong economic drivers are expected to fuel solid growth in commercial real estate in the year ahead. The Winnipeg CMA welcomed more than 65,000 new residents between July 2022 and July 2024, boosting the population by almost eight per cent to 940,000, according to Statistics Canada's Annual demographic estimates, census metropolitan areas, and census agglomerations: Interactive dashboard. The population influx is expected to stimulate continued growth across most sectors, particularly multi-unit residential and new business. A favourable interest rate environment, along with the potential for further rate cuts, should bolster investor confidence and continued momentum across the city's commercial real estate landscape.
London
While current trade tensions have yet to impact London's commercial real estate sector, most businesses have adopted a wait-and-see attitude until greater clarity emerges. Two asset classes, however, have bucked the trend, with a marked shortage of industrial space driving healthy leasing activity, while population growth propels the city's multi-family rental market.
Statistics Canada's Annual demographic estimates, census metropolitan areas and census agglomerations: Interactive dashboard showed that London's population rose 3.1 per cent to almost 630,000 between July 1, 2023, and July 1, 2024, bolstered by both international and intraprovincial migration. Student rentals located near Western University and Fanshawe College make up most of the multiple-unit residential construction currently underway, while luxury rental units compile the remainder, given rising demand from the city's young professionals and empty nesters. Higher construction costs are driving rental rates higher, with one-bedroom units now commanding between $1,800 to $1,900 a month, and two-bedrooms going from $2,000 and $3,000. Cap rates are falling for existing multi-unit residential, now resting at between 4.5 per cent and 5.5 per cent.
Retail stable but evolving
Smaller retail plazas continue to be sought after by investors for future development, but product is few and far between. Retail vacancies are low, with most near or at full occupancy. The city's larger retail properties are seeing increased vacancies, with lease rates coming down to $18 to $25 per square foot. Landlords are working with existing tenants on renewal, with some offering rental reductions, given that they'd rather renegotiate terms than allow good tenants to leave and spent months filling empty units. The tenant mix in area malls—including both White Oaks and Westmount—is evolving with less traditional retail and more service-oriented businesses.
Industrial lease rates rise amid land scarcity
The Industrial sector remains strong, with lease rates for older properties sitting at approximately $10 per square foot, while newer product is commanding $12 to $15 per square foot. Dancor Construction Ltd. has recently introduced additional industrial product to the market, although some of its speculative properties remain unsold. Developable land continues to be in high demand, but few parcels are available for sale. While there has been an influx of businesses seeking parcels of land—including those in manufacturing, research, warehousing and technology—the city is exceptionally selective in the projects they allow to move forward, with most land going to industries that will create the most job opportunities for London residents.
Office shifts to the suburbs
Vacancy rates for downtown office space continue to push higher, now sitting north of 30 per cent, as the new hybrid workplace models take hold. A-class space is performing slightly better than B- and C-class space, but tenants are increasingly drawn to office space in the suburbs, where vacancy rates were considerably lower in the first quarter of the year. Smaller tenants are especially interested in suburban office space, ranging from 500 square feet to 1,200 square feet, with the added bonus of on-site parking.
The city continues to incentivize builders and developers to convert existing downtown office space to residential housing through its Office-to-Residential CIP incentive program introduced in 2024. The first building located on Dufferin Avenue will come to market in under a year, while a second is planned for the former Rexall Pharmacy on Dundas and Richmond St. No other approvals have been issued to date.
While London's commercial real estate market remains stable for now, the threat of tariffs could have serious repercussions for the city and surrounding areas if left unresolved for too long. In the interim, population growth and migration will continue to sustain the multi-family rental market while industrial leasing benefits from a shortage of available space. In the long-term, the outlook for the city is positive, bolstered by a diverse local economy with vibrant sectors including healthcare, education, technology, manufacturing, food production, financial services, and health care. Its favorable infrastructure, proximity to major transportation routes, affordability and high quality of life will continue to draw new residents, business, and investment.
Hamilton and the Niagara Region
While tariffs on steel, aluminum and auto parts have had an impact on Hamilton's commercial real estate performance this year, lower land costs continued to spur growth in the Niagara Region. Industrial sales were up significantly in Q1 2025 according to data from CoStar, with 11 properties sold, compared to five during the same period in 2024.
Despite a substantial increase in the number of industrial listings—up 35 per cent in Niagara and 33 per cent in Hamilton—lease rates continue to edge upward due to low vacancy rates. Industrial lease rates now sit at approximately $15 per square foot in Hamilton and slightly lower in the Niagara Region, hovering at between $12 and $14 per square foot. Both markets have reported shortages of serviced industrial land. Given current market conditions, there has been some repositioning as business owners downsize, especially in the manufacturing sector. Higher rental costs are behind the upswing for industrial property sales as more business owners opt for ownership. Owner-occupiers are driving demand for buildings in virtually every industrial category, with plans to retrofit to suit their needs. Growth in the airport industrial area has slowed, with the city trying to balance the impact of industrial development with its environmental impact.
Retail scarcity drives lease rate pressure
Small service-based retail continues to perform well in Hamilton, St. Catharine's and throughout the Niagara Region, with low vacancy rates in markets across the board sparking some talk of building on speculation. Scarcity of smaller spaces between 1,000 to 1,100 square feet and mid-sized product from 3,000 to 5,000 square feet is starting to place upward pressure on retail lease rates. Almost every strip retail plaza has a waiting list of potential tenants.
Eastgate transformation reflects long-term ambition
Malls continue to grapple with rising vacancies, looking for innovative ways to improve customer experience. Eastgate Square, servicing East Hamilton and Stoney Creek, is expected to undergo a massive transformation to provide a "revitalized retail destination and vibrant residential community." While the development's original plan has changed somewhat, the new proposal includes 19 residential towers that will house approximately 7,600 people in 4,300 units. The project is forecast to unfold over four phases with 10 years to full completion. Groundbreaking is yet to be determined, given that most new construction of multi-residential units has ground to a halt.
Student downturn softens rental market
An oversupply of purpose-built rental units and condominium apartments, combined with softening demand, has contributed to rising vacancy rates which remain amongst the lowest in the country. Hovering at 2.4 per cent and 1.8 per cent respectively, vacancy rates have climbed in large part due to a notable decline in international student enrolment in the area's university and college campuses, according to the Canada Mortgage and Housing Corporation Rental Market Report issued in Fall, 2024. Cap rates for multi-family are starting to climb, with medium-sized product nearing seven per cent in Hamilton, but there is a limited supply of product in the pipeline.
Office leasing remains stagnant in Hamilton's core, with listings having more than quadrupled from year's past. Vacancy rates sit at north of 20 per cent. In April, the City of Hamilton announced it is embarking on a 10-year Downtown Revitalization Strategy to reimagine and reinvigorate the city's core. While in its infant stages, a comprehensive plan to increase economic activity, enhance community vibrancy and generate new housing options is a step in the right direction. In contrast, new office space in Hamilton's surrounding communities is increasingly sought after, with much lower vacancy rates.
After a strong run, commercial activity in Hamilton and the Niagara Region is right-sizing, with fewer mega projects coming on stream. The shift has led to Real Estate Investment Trusts (REIT) and institutional investors stepping back, opening opportunities for smaller investors to stake their claim in the market. Programs such as Multi-Unit Residential Buildings (MURB) recently introduced in the Liberal Party platform, would support investment in the market and provide increased capital in for smaller players. However, the current lull in the market may have long-term repercussions, which may become increasingly evident when inventory levels have been absorbed and little new product is available, placing strong upward pressure on values yet again.
Greater Toronto Area
Looming trade wars continue to weigh on commercial investment in the Greater Toronto Area (GTA), with leasing and sales activity slowing year over year across nearly all asset classes. While formal trade talks between the U.S. and Canada have yet to begin, and a resolution remains distant, the uncertainty in the market is creating opportunities for near-and long-term positioning of assets.
Industrial corridors expand to outlying areas
Industrial continues to be the top-performing sector in the GTA. Availability rates in Q1 2025 stood at 4.6 per cent, the second lowest in the country, but 40 basis points above last year during the same period, according to Altus Group. Although demand is still present, absorption rates have eased from peak levels, creating more balanced market conditions and prompting landlords in the city proper to offer increased incentives. Industrial corridors developing along the 400-series highways in areas including Whitby, Ajax, Pickering, Kleinburg, Bolton, Caledon, Nobleton, and Georgetown, are drawing a growing number of buyers and tenants as larger, modern buildings offer even more competitive lease rates. In bedroom communities such as Markham, Vaughan and Scarborough, adaptive reuse of existing industrial spaces continues, with a growing trend toward recreational conversion for uses like pickleball, padel and golf simulators.
Hotel sector outperforms across the board
Current dynamics in travel and tourism are stimulating further growth in domestic and international travel, given the current pull back to U.S. destinations. Altus Group recently reported the hotel sector was the top performing asset class in commercial real estate in 2024, with a 48 per cent increase in growth in 2024, compared to the previous year. The Greater Toronto Area, in particular, experienced significant gains, with $552 million in dollar volume transacted, an increase of 173 per cent over 2023 levels. The upswing reinforces Toronto's status as a top destination for leisure and business travel and a major hub for investors to diversify their portfolios.
Purpose-built rental pushes through condo downturn
The multi-family asset class continues to navigate upheaval in the Greater Toronto Area. While the collapse of the condominium market has had a substantial impact on the sector, construction continues on purpose-built rentals. More than 700 rental units began construction in the first quarter of 2025 in the Greater Toronto and Hamilton Area (GTHA), predominated within the 416 area code, as activity in the 905 area code declined, according to a recent report by Urbanation. Vacancy rates in the city rose by over 90 basis points year over year to 3.5 per cent. Yet, Urban Toronto reported a record-setting number of residential proposals submitted in Q1, representing close to 26,000 new rental units—more than double the 9,931 proposed during the same period in 2024. Financing, however, remains a challenge despite the various funding programs available from the Canada Mortgage and Housing Corporation (CMHC). Applications are now closed to the popular Housing Accelerator Fund, which was designed to "remove barriers to build more homes, faster."
Retail adapts and holds firm
Retail, by contrast, remains relatively stable despite notable disruptions. The bankruptcy of the Hudson's Bay Company marked the end of an era, but lease rates have held firm in large part due to low vacancy rates and evolving mall strategies. Shopping centres across the GTA continue to expand their offerings, incorporating residential units, restaurants, entertainment venues, and niche grocery stores. Malls in the 416 and 905 area codes, led by Yorkdale Shopping Centre, Square One and the Eaton Centre, continue to lead in national performance rankings, according to ICSC 2024 Performance Rankings. Yorkdale remains a standout with lease rates now over $2,300 per square foot—$800 more than any other Canadian mall. The void left by HBC's exit is expected to be absorbed by new retail ventures. Retail plazas remain a top target for investors, especially those with mixed-use development plans. Ideal properties are anchored by grocery or banks, but inventory in the Greater Toronto Area is scarce and new developments are hindered by limited shovel-ready land and planning constraints.
Office sector wrestles with oversupply
Overall office vacancy in the downtown core remains elevated, hovering at 18.8 per cent in the first quarter of the year according to Altus Group, although top-tier A+ buildings are experiencing much stronger occupancy rates. Many large organizations are scaling back their footprint, while merger activity grows as firms seek to lower risk and operational exposure. B-class space remains relatively steady while C-class office space focused on medical use is performing well. Chronic shortages in healthcare facilities, seniors' residences, student housing, tech space and medical and biosciences labs make a solid argument in favour of repositioning of aging B and C-class inventory. The aging population in the GTA further underscores the need for more purpose-built rentals and healthcare-oriented developments.
Investment sentiment remains cautious. Institutional investors and REITs are hesitant but smaller players may be drawn back into the market by the federal government's proposal to re-introduce the multi-unit residential building (MURB) cost allowance. This would allow investors to claim depreciation and expenses against unrelated income—a model that previously helped create approximately 200,000 units between 1974 and 1981.
To restore momentum in construction and development, further stimulus is essential. The freeze on development charges at current rates in Toronto is simply not enough. The city should look to markets like the City of Vaughan for leadership, which recently cut development charges by almost 50 per cent on low-rise residential to help drive growth in new construction. Additionally, municipal grants and loans for façade improvements could rejuvenate aging office properties, especially those along major transportation corridors and in the downtown core. While current market hesitance is likely temporary, meaningful policy support and a resolution to cross-border trade tensions will be key to restoring confidence in the GTA's commercial real estate market.
Ottawa
Solid economic fundamentals continued to underpin Ottawa's commercial real estate market, despite renewed concerns of a possible recession given current trade tensions. First quarter activity was strong out of the gate in the industrial and retail asset classes, with demand continuing to outpace supply.
While industrial availability rates have edged slightly higher over the past year, Ottawa remains the lowest in the country's top eight industrial markets, sitting at 4.3 per cent, according to Altus Group's quarterly industrial update for Q1 2025. Smaller light industrial buildings remain most coveted, especially those with good ceiling height (21 ft.) and loading docks. A shortage of available land zoned industrial is hampering new construction and no new completions were reported so far this year. Construction is underway on a 200,000 sq. ft. property, but more than half has been pre-leased. Industrial condominiums are a hot commodity as well, with units recently listed in both the city's east and west sides scooped up quickly. Most never make it to market. Tight market conditions continue to impact net rental rates, but increases have been tempered due to current market realities.
Ottawa's retail market continues to thrive, with both leasing and sales activity robust throughout much of the city. Most retail space is quick to sell, and finding anything in the sought-after $2 million range is virtually impossible. Adaptive reuse is occurring throughout the asset class, with the best example a new gym at the site of a former Canadian Tire store. After a long drought, new retail construction is expected to break ground in Barrhaven, Orleans and Kanata this year. New entertainment venues are planned for both the Byward Market and Kanata. Investors have been driving demand for retail centres that are anchored by grocery stores. A brokered retail plaza recently traded at a cap rate of six per cent. New business is also filtering in from other provinces. Ottawa was chosen by Montreal-based furniture retailer Cozey for their first pop-up store in 2025, with the intent to eventually open in the city.
Conversions reshape downtown office market
While the downtown office sector has been hard hit and struggling post-pandemic, availability rates are trending downward. According to Altus Group, availability now sits at 12.8 per cent in Ottawa, down from 13.6 per cent one year ago. A Class buildings, and to a lesser extent B Class, remain stable in terms of leasing, while C Class and lower are potential retrofit sites. Conversions have played a role to date, with several properties completed, and at least three more underway, including 360 Laurier Avenue West, 200 Elgin St. and 230 Queen St. Governments at various levels have promoted these conversions, with incentives including a full GST rebate for new residential rental property construction or commercial business conversion to residential. A third building in Kanata recently received approval to transform an 11-storey office tower to a mixed-use building with 115 units. The federal government has set it sight on adding residential housing stock by repurposing outdated federal office buildings. Fifty-six properties have been targeted to date for conversion, including 22 addresses in Ottawa. The intent is to provide a long-term lease to developers as opposed to a one-time sale.
Multi-family supported by institutional capital
Real Estate Investment Trusts (REIT) and institutional investors continue to foster growth in the multi-family purpose-built rentals asset class. RioCan, Killam, and Minto all have a presence in the market, with Dream wrapping up construction on more than 200 units in Zibi Block 204 and Equiton launching three residential towers in mid-2025. CMHC financing has contributed to the upswing in activity in recent years, with up to 95 per cent financing and lower amortization periods through the federal government's Housing Accelerator Plan. Smaller investors who have been driving demand for multi-unit duplexes and triplexes in areas such as Vanier, Overbrook, and Hintonburg in recent years, have stepped back in 2025 as concerns over tariffs continue incapacitate buyers.
Ottawa's commercial market is well positioned for the future, supported by strong economic fundamentals and continued demand across key asset classes. Strength in the city's industrial sector and a burgeoning retail market, thanks to adaptive reuse projects and new developments gaining traction, have set the stage for a stronger second half of 2025. Although challenges persist in the downtown office market, declining availability rates and proactive conversion strategies are indicative of a positive upward trajectory. The growing momentum in the multi-family sector, fueled by institutional investment and federal housing incentives, further signals long-term market confidence.
Halifax Regional Municipality
Despite the disruption caused by U.S. tariffs, overall activity in Halifax Regional Municipality's commercial real estate market remains steady, though off year-ago levels. Confidence exists across the board, but much of the movement is now driven by necessity. While some buyers and tenants are capitalizing on current opportunities, many others—along with landlords and sellers—have adopted a cautious, wait-and-see stance as they seek greater economic clarity.
The industrial asset class continues to be the most active in Halifax, although it has had a significant shift this year. A substantial influx of new space has driven industrial availability rates higher, climbing to 12.7 per cent in the first quarter of 2025, up substantially from the 7.1 per cent reported during the same period last year, according to Altus Group's Canadian Industrial Market Update. Given slower economic growth and higher lease rates for newer product, hovering around $17 to $18 per square foot, tenants are increasingly hesitant to commit at higher pricing, weighing heavily on absorption rates.
Focus has now shifted to older, existing stock as tenants look to cut costs by taking advantage of lease rates that are at least 25 per cent lower. B- and C-class industrial space in prime areas, including Bayers Lake and Burnside, is experiencing heightened demand as a result, especially for larger buildings with 10,000 sq. ft. or more divided into multiple units. That said, the supply of older, cost-effective product remains tight throughout the municipality.
Population growth slows; housing response moderates
Between 2021 and 2024, Halifax was on a solid growth trajectory, with Statistics Canada's Annual Demographic Estimates by Census Metropolitan Area (CMA) and Census Agglomerations: Interactive dashboard reporting almost 50,000 new residents, bringing the population of the Halifax CMA to just over 530,000. In response to the growing housing crisis, developers moved to expand the city's housing stock, adding a significant number of condominium units and purpose-built rentals through the federal government's Housing Accelerator Fund. More than 4,100 multi-family starts occurred in 2023 alone, an increase of close to 60 per cent over the previous year. However, as immigration and in-migration have decreased, so too has demand for new multi-family housing. Just 3,500 units are currently underway in the city and fewer projects are planned. Although affordability has improved, the anticipated return of tenants and buyers has yet to materialize, even with incentives offered by landlords.
Retail finds its rhythm; local operators rise
Retail has remained resilient, particularly in the downtown core where an increase in tourism has buoyed growth in owner-occupied businesses including restaurants. The steady stream of incoming multinational retailers has subsided, and local entrepreneurs are filling the void. Owner-operators are now increasingly present across a wide range of sectors, including retail, hospitality, and light industrial. According to Altus Group's Canadian Investment Trends Survey for Q1 2025, Halifax ranks among the top three Canadian markets for opportunities across several asset classes, including food, grocery and bank-anchored strip plazas, suburban multi-unit residential, and multi-tenant industrial.
The office sector has shown signs of strength, with activity picking up in B- and C-class buildings. The city had one of the lowest office availability rates of major Canadian markets in the first quarter of 2025, hovering at 8.3 per cent, down from 14.1 per cent in Q1 of last year. Conversion projects have absorbed much of the space with a substantial spike in non-profits entering the market, with an eye to redevelop existing office space to accommodate residential market needs such as student and senior housing.
Looking ahead, Halifax's commercial real estate market remains well-positioned for continued growth once near-term headwinds, such as tariffs, are addressed. Although down from peak population growth, the region continues to benefit from immigration, in-migration and a steady flow of international students, all of which support demand. A targeted government initiative to unlock investor capital and encourage reinvestment could further accelerate momentum, ensuring Halifax remains a top-performing market in the years to come.
Newfoundland-Labrador
Buoyed by offshore oil production and strength in manufacturing, Newfoundland-Labrador is expected to lead the country in terms of GDP growth for the second year in a row. While significant capital investment in mining, energy and infrastructure projects is occurring throughout the province, the impact on the commercial real estate market has been limited to date.
Fifteen commercial transactions were reported in Newfoundland-Labrador over the $500,000 price point between January and April of this year on the province's MLS system—including a commercial mix building that sold for $4.2 million. Last year, just seven commercial properties changed hands, with the most expensive selling for $2 million in Labrador City.
Industrial continues to experience high demand
Industrial remains most sought-after, with cap rates running between seven and eight per cent. End-users are fueling demand for smaller 2,000 – 3,000 sq. ft flex-space industrial properties, with two to three offices and warehousing facilities. Leasing is also popular, with existing office space renting from between $12 - $16 per square foot, compared to $21- $22 per square foot for newer construction.
While St. John's office market is picking up, vacancy rates still hover north of 20 per cent. With more than 3.3 million square feet currently available for lease in the downtown core and availability across all classes, most landlords are offering incentives. The Beothuk Building is reporting 100 per cent occupancy – up from 38 per cent one year ago. Some of the more prominent moves in the market have occurred in the Scotia Centre, which recently leased out approximately 17,000 sq. ft.
Strong residential activity, particularly in the St. John's area, is prompting an increase affordable housing projects. Some non-profit developments are breaking ground this year, while purpose-built rentals are made possible with government-assisted grants. Institutional investors and REITs are active in St. John's multi-family asset class, acquiring large apartment portfolios.
Retail and residential activity intensifies in St. John's
Retail remains healthy in St. John's, with the Avalon Mall and big box stores—including the largest Costco in Canada, Marshalls, HomeSense, and Mark's—at the Shoppes of Galway, drawing shoppers from all areas of the province. The Shoppes of Galway continues to expand, with 700,000 sq. ft. of retail available for lease, and the development is positioned for further growth with a 2,400-acre master planned community in progress.
Mega-projects signal long-term momentum
With a growing pipeline of resource and infrastructure projects, supported by robust government and private-sector investment, Newfoundland-Labrador is entering a period of renewed economic momentum. The Memorandum of Understanding (MOU) agreement between Quebec and Newfoundland and Labrador terminates and replaces the 1969 Upper Churchill Contract, with a new energy partnership formed between the provinces that is expected to generate $225 billion in revenue. New mining initiatives are in place for Vale's Voisey's Bay Mine, Labrador Iron Mines – James Mine, the Rambler Copper-Gold Project and the Valentine Gold Project, while new energy projects include the Terra Nova FPSO Life Extension, Voisey's Bay Wind Energy Project, as well as the Toqlukuti'k Wind and Hydrogen Project. Government infrastructure plans to upgrade roads and highways, military infrastructure at the Department of National Defence, alongside the construction of hospitals and clinics represent billions of investment dollars.
While commercial real estate activity has been brisk, indicators point to a continued upswing as major developments advance. The province's strong fundamentals—led by solid industrial demand, expanding retail, and institutional interest in multi-family assets—underscore a market poised for growth. Investment in new building construction in the province rose to over $34 million in March 2025, according to Statistics Canada, up 30 per cent over the level reported one year ago. Confidence is building, and the outlook for commercial real estate in Newfoundland-Labrador is increasingly optimistic.
About the RE/MAX Network
As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in over 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides.
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