Joshua Sonshine, a senior vice-president with CBRE, will appear alongside other real estate industry leaders at the Connect CRE Canada 2026 conference in Toronto on June 25. He will moderate a panel discussion, titled “Institutional Investment & Capital Raising in 2026: Where is the Smart Money Going?” Institutional capital has been selectively returning to Canadian real estate throughout 2026 after several years of market recalibration. However, institutions are re-entering the sector with new expectations around structure, risk, liquidity and performance. Sonshine and other industry leaders will discuss these investors’ current approaches. In advance of the discussion, Connect Canada CRE spoke with Sonshine for his take.

Connect: What factors are bringing institutional capital off the sidelines in 2026?

Sonshine: Three things mainly. Overall pricing is gaining clarity; cap rates have started to stabilize and the bid-ask gap that stalled transactions through 2024 and 2025 has narrowed. Canada’s stability has become a real differentiator; amid global volatility, our safe-haven is pulling in international capital that has already voted in favour of Canadian real estate. And the debt markets have reopened for quality product, which restores the necessary leverage and overall capital costs for groups to transact

Connect: Would you describe their return as gradual or more determined?

Sonshine: It’s both, and the distinction matters. At a portfolio level, the return is measured and disciplined; nobody is deploying indiscriminately. But where conviction exists, capital is moving with real determination and competing hard for the right assets. I’d characterize it as selective conviction rather than a broad risk-on rotation; the money is patient on price but decisive when the asset fits the mandate.

In which property sectors or transaction types are you seeing institutional interest re-emerge this year that would have been unlikely to attract institutions a year ago?

Office is the clearest example. Core office was effectively off the institutional menu just a year ago. Today, the sector has stabilized, with both vacancy and rental rates trending positively, return-to-office gaining traction and lenders re-engaging, particularly on Class A and better; conviction is back and notable trades are closing, both in investment sales and refinancings. Retail is the other notable swing. After years out of favour the sector is resurging in a meaningful way; retailers entered 2026 on far firmer footing and capital is chasing well-located necessity-based assets, drawn by the resilient cash flow the asset class provides. On the alternatives side, data centres stand out, though within the Canadian context they’re only beginning to build momentum; AI and hyperscale demand is pulling significant global institutional capital into the space, with investors lifting allocations into 2026 and beyond.

Q: How are borrowers adjusting their expectations even as these capital sources are coming back into the market?

A: The most telling shift is on the lender side. Sentiment heading into 2026 and beyond has improved meaningfully. Lenders remain disciplined about which assets and geographies they want exposure to, and that selectivity persists. But for the right opportunity they compete aggressively, and we are seeing that directly in credit pricing and in lender bid depth; spreads are tightening and competition is intensifying for preferred assets. For borrowers, the implication is clear. Credit markets are opening, but they are doing so unevenly across asset classes and geographies.  Understanding which lenders are most active in a given segment, and where their appetite is strongest, increasingly distinguishes a financing that executes from one that falters.

Canada’s commercial real estate market is evolving fast—be in the room where it all comes together. On June 25 in Toronto, Connect CRE Canada brings together the leaders actively shaping the market. Join an influential audience of 200 investors, developers, brokers, lenders, and owners for high-level networking and timely discussions on the trends impacting today’s market. Hear from leaders at TD Asset Management, Fiera Real Estate, Starlight, Woodbourne Capital Management, REMAX, Fengate Asset Management, Stonebridge Financial, Yardi, and more. Register today to stay ahead of the market and build valuable industry connections.