Institutional investors are taking a more disciplined approach to capital deployment as they return to Canada’s commercial real estate market.

Companies are paying closer attention to risk as they bring more institutional capital off the sidelines, according to industry leaders who participated in a panel discussion at Connect’s 2026 CRE Canada conference in Toronto.

“After a few years of recalibration, institutional capital is coming back to Canadian real estate,” said CBRE Capital Executive Vice-president Joshua Sonshine, who led the panel discussion. “It’s more selective. It’s a bit more structured. It’s a bit more disciplined with respect to risk, but certainly coming back.”\

As institutional capital returns to the market, investors are waiting to price the bottom when that task is nearly impossible, said Kathy Black, Fiera Real Estate’s head of development.

“The reality is, there is not really just one bottom,” she said. “The cycles are different across the different asset classes and even geographies.”

As vacancy levels vary across the country, investors are expressing concern about oversupply in such sectors as multi-family and industrial. But she noted that demand can vary by sector. For example, there is strong demand for mid-bay and small-bay industrial spaces due to limited supply she finds that she has to educate investors while seeking to fundraise.

Colin Lynch, TD Asset Management’s private-markets program leader, said institutional investors are looking for higher returns per unit of risk, adding that players are more sensitive to risk. Investors know that they have to outcompete their rivals on returns as they consider the risks.

“I think really the balance here is: How do you maximize your [return on investment] on what you’re doing to an asset in terms of adding value, and what are some of those high leverage moves?” he said.

But some institutional investors are willing to take risks and build in returns, he added.

Pictured: Panelists discuss institutional investors’ return from the sidelines at Connect’s 2026 CRE Canada conference in Toronto.

Photo: Connect Media