REITs and institutions are cautiously returning to Canadian CRE

The current landscape of global trade tensions and economic uncertainty is bound to be making commercial real estate investors cautious, but it also creates opportunity.

And for the Canadian commercial real estate (CRE) market there are several factors offering opportunity including strategic repositing and adaptive use along with a focus on the changing climate, all of which is informing portfolio construction.

A new report from REMAX Canada looks at CRE activity in the first quarter of 2025 across 12 major Canadian markets and highlights that multi-family and industry were the best performers followed by retail.

Western Canada is leading the commercial growth along with Newfoundland and Labrador, thanks to a rising population, solid economic performance, and increased investment activity.

“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 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.”

Looking at the best-performing CRE asset class, multi-family, population growth amid housing shortages are fuelling demand for purpose-built rentals nationwide. There is also activity in the conversion of office and retail units to housing but this is at a slower pace. Older multi-family building portfolios attract capital in some areas due to the potential for revitalization.

Meanwhile, logistics is driving the need for industrial units as ecommerce continues to grow and for retail, grocery-anchored retail centres remain a preferred asset for private and public investors and continue to outperform. Suburban areas are particularly good performers, especially in Ottawa, Halifax, Winnipeg, Edmonton and the GTA.

There is also interest in student and seniors accommodation and again there is scope for repurposing of office accommodation for these purposes.

Despite performance, multi-family and industrial assets have seen a ‘serious upswing’ in inventory, the report states, which has helped to ease rent growth.

“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.”