CRE Leaders Talk About Tariffs, Other Topics
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 marks the first edition in the series. Today, Diana Hoang, owner and managing director of Spear Realty, Alex Akman, CEO at Shindico, and Jonathan Turnbull, managing director and head of Canada for Harrison Street, share their insights. Watch for more comments in coming days.
What potential investment barriers could people overlooking?
Diana Hoang: “We’ve been always speaking about office-building conversions. I think there’s a lot more discussions [now.] There have been discussions: ‘Why is [obsolete office space] not being converted into hotels?’ I hear that the hope the hospitality market is picking up as well. And, another question: Can we convert these existing office buildings to whether multi-res or hospitality? Those are good. Value-add raises, they’re hidden gems that we could definitely look at differently.
“[Office conversion] been a discussion of it because it’s so expensive to convert an office building to apartment buildings, but I think [lower] construction costs have definitely helped a little bit. They had to be doing it a lot in Calgary because of the [city’s investment] incentive, but we’re doing it here now [in the Greater Toronto Area.]”
How do you think tariffs will impact the Canadian CRE market during the second half of 2025 and beyond?
Alex Akman: “My view is that tariffs are likely going to result in material price increases, not materialism, very expensive, but construction-material price increases. Which, as a result, is going to make the building more expensive. Which means [as a property owner] you’re going to need more rent to just to achieve the same return. For example, Alumicor shut their Winnipeg office down. That is a big problem for us. There’s not a lot of aluminum-window suppliers in the city, and that’s one of the biggest ones nationally, internationally. So, now you’re looking for a different product that’s made in Canada to avoid the tariffs, and the tariffs have also resulted in a competitor closing. So, we know what that means for market pricing. If you’re the only one, you’re probably able to charge more. So, we’re a little bit nervous from that perspective on the development side.”
Jonathan Turnbull: “The tariff question is difficult to answer given the market dynamics surrounding them. We can not be certain what tariffs (if any) will be in place in two weeks, let alone 18 months from today. We hope that all parties can reach a balanced trade agreement. That said, the current tariff impact on new Canadian CRE development does not appear to be substantial. Harrison Street’s costing consultants at Finnigen Marshall have estimated that new development hard costs have been elevated by 1-3% by the current tariffs which could be offset by lower employee costs expected in the near-term with construction slowdowns. In my opinion, the biggest impact of tariffs is the market uncertainty which is holding back broad traditional sector investment.”