Canadian commercial real estate investment demand is generally strong, and getting stronger, as 2026 approaches.

That’s the prevailing view of executives interviewed in Connect’s 2025 Canadian Summer Leadership series, which has now concluded. The leaders expect more capital to come off the sidelines in the near term as Canada demonstrates that it can manage U.S. tariff increases, domestic and international macroeconomis and other challenges.

The CRE leaders shared their market outlooks, in terms of the overall national market and, in some cases, their firms’ specialty areas. In addition, the leaders offered their expectations regarding top-performing asset classes, hidden investment gems, the effects of U.S. tariff increases, foreign investment in Canada and potential overlooked investment barriers.

Notably, the hard-hit office market is among those expected to shine in the second half of 2025 and into 2026 as the return-to-office movement increases supply-and-demand pressures, particularly in Toronto’s financial core. Multi-family and industrial are expected to continue posting strong results, but perhaps, to a lesser degree than they have previously as both sectors cool for a while. But the two sectors are viewed as strong long-term investment plays.

Grocery-anchored retail, other retail shopping-centre assets and such niche sectors as data centres, student and seniors housing, and self-storage are also expected to fare well.

“Overall, property-market fundamentals for the highest-quality assets should remain relatively strong, which should support income returns,” said Simon Holmes, BGO’s Canadian chief investment officer. “However, heightened uncertainty could further delay a rebound in investment activity and volume.

“With economic growth set to slow, the Bank of Canada 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.”

But Jonathan Turnbull, managing director and head of Harrison Street’s head of Canada, expects a “mixed-bag” of investment over the next 12 to 18 months, depending on the asset class.

“Some sectors will see strong support/demand and others will remain rather illiquid as investors continue to assess their real estate portfolio and look to transition its composition over time,” said Turnbull. “The institutional investor presence in Canadian CRE is strong and, as such, the activity of owners is not rushed, but rather calculated. They can afford to be patient, which will likely lead to muted transaction activity.”

Alex Akman, Shindico’s chief operating officer, said Canadian CRE continues to be a “very local market,” with some regions and their asset classes, notably Southern Ontario and its automotive sector, struggling more than others.

Mark Fieder, head of Avison Young’s Canadian business regards the office sector, a long-time market pillar that fell out of favour during the COVID-19 pandemic and ensuing years, as one of the overall market’s hidden investment gems, as leasing activity increases steadily and asset prices fall dramatically from their former peak values.

Meanwhile, Shindico’s Akman regards the indoor-outdoor storage sector, in which his company has invested heavily, as an unnoticed jewel. And, Medallion Corporation CFO Scott Cryer view distressed land as an asset that is largely disregarded, particularly in some suburbs where mid-sized developments could be easier to lease up and get built quicker.

“I think long-term, strong performance comes out of where land pricing is entered into. So, I think that’s maybe the one that’s not front and centre,” he said. “But we’re hopeful that could be a bit of a shining light as well.”

However, Scott Pickles, managing director of Windmill’s advisory arm Urban Equation, dismissed the notion that a hidden gem even exists. But he expressed sentiments similar to those of Cryer on underutilized land.

“There are no real hidden gems — just many who do not see the opportunity and ability to see opportunities in the market,” said Pickles. “The trick is to align the needs of people and the planet with assets that make sense in the long term. 

“Developers should consider underutilized properties or single-use properties that are inefficient or underperforming (i.e., vacant), both in terms of asset types and site, as well as energy performance and quality of spaces. These types of properties provide great opportunities to develop high-performing assets, create interesting spaces that drive engagement, reduce carbon, and achieve solid financial performance.”

Pickles called on the CRE sector to deploy more creativity instead of “racing towards the next shiny asset” during times of stress.

Harrison Street’s Turnbull is more concerned about the uncertainty caused by U.S. tariff increases rather than the higher levies themselves.

“The tariff question is difficult to answer given the market dynamics surrounding them,” he said. “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.”

He noted that Harrison Street’s costing consultants at Finnigen Marshall have estimated that new development hard costs have been elevated modestly by 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,” he said.

But Shindico’s Akman is concerned about American tariff hikes’ effects on construction-material prices and, in turn, the cost of a development project.

“Which means [as a property owner], you’re going to need more rent just to achieve the same return,” he said.

But Mark Goodman, principal and co-founder of multi-family investment specialist Goodman Commercial, says the tariff situation is “a lot of noise” for his sector.

“It’s something that people like to point to as an excuse as to why, but that’s manufactured and I don’t see that being an issue,” said Goodman, whose business focuses on the Vancouver region.

Shindico’s Akman said reduced immigration, due to a change in federal policy, could prove to be an investment barrier due to potential demand disruption in such areas as multi-family. But he expects the impact to take time to flush out.

Phil Stone, BGO’s head of Canadian research, said ineffective property management could deter investment.

“Too often, investors underestimate how critical property management is to realizing the business plan,” he said. “Having the right team on the ground can be the difference between hitting your pro forma and missing it. While interest rates have likely peaked, we also don’t expect a material decline in rates from where we are today.”

Today, “generating alpha” comes down to execution, he added, stressing the need for experience and expertise in sourcing opportunities, underwriting with real-time pricing and leasing data, and active management to grow net investment returns.

Urban Equation’s Pickles said companies’ underestimation of tenant requirements could be a long-term deterrent. He called for the development of more assets that excel in operations and consider residents’ health, value to the broader community, and adaptability to help them outperform throughout their lifespans.

But Avison Young’s Fieder does not believe that the overall market faces any barriers.

When it comes foreign investment, Harrison Street’s Turnbull and his company are “rather bullish.” Turnbull believes that many of global investors’ “excuses” for not investing in Canada have been “debunked” by recent market action and the increasing divergence in Canada’s correlation to the U.S. market due to the current political environment south of the border.

Meanwhile, Skyline CFO Wayne Byrd is “quite optimistic” about Canada’s prospects for attracting foreign capital for the foreseeable future.

“Canada continues to be viewed globally as a resilient market and remains a primary destination to deploy capital,” he said.

Many CRE leaders believe that further Bank of Canada interest-rate reductions will catalyze investment across asset classes. But Stone said investors should not depend on lower rates to drive returns.

“The real opportunity lies in income growth and value creation through active management, not financial engineering,” he said.