BGO, Urban Equation Executives Assess CRE Market
Connect is holding its Summer 2025 Leadership Series in which top executives from Canadian commercial real estate firms provide insights on the state of the market. Today, Simon Holmes, BGO’s Canadian chief investment officer, and Scott Pickles, managing director of Windmill’s advisory arm Urban Equation, offer their views.
What is BGO’s outlook on the Canadian commercial real estate market over the next six to 12 months?
Simon Holmes: Overall, property-market fundamentals for the highest-quality assets should remain relatively strong, which should support income returns. However, heightened uncertainty could further delay a rebound in investment activity and volume. With economic growth set to slow, the Bank of Canada (BOC) should continue to cut rates, which should support valuations and yields. Increased credit risk might offset this benefit for certain properties, but that could place core assets in a more favourable position given their relative stability.
Which asset classes do you expect to shine and why?
Scott Pickles: “We’re still seeing a big push towards residential to fill the housing gap. For individuals, it’s a critical asset that not only provides shelter and stability, but also, for investors, it’s a great opportunity to secure an income-producing asset. While the market often becomes preoccupied with other asset classes, the demand for housing and its ability to support communities remain constant.
“What we are seeing now is a housing and affordability gap in our housing inventory. To address this, it will require new ways of building to get the market to where it needs to be. Something akin to the post-war push to mobilize the industry at scale. Urban Equation’s recent work with Windmill Development Group’s Halsa project at 230 Royal York [in Toronto] is an example of the kind of housing that can be scaled up. The nine-storey building has walls and floors that are prefabricated using Intelligent City’s Vancouver mass-timber structure and envelope system, which is then shipped to the site. It’s truly impressive to see how using this system can accelerate the building process and enhance the level of quality due to its off-site production. With their ability to build a floor in a day, we can see the potential for housing to be accelerated, leading to more homes for individuals and families. We need to see more projects like that getting support and attention. There are many ways developers can build sustainably and cost-effectively at the same time.”