Canadian commercial real estate investment fell 25% in the first half of 2023, but volumes remain elevated, says a new report from JLL Canada.

Despite rising interest rates and a slowing economy, volumes are on track for their third-highest annual total on record, said the company in its fall Canadian commercial real estate investment outlook. Investment sales reached $28.5 billion in the first half as private investors and family offices continued to drive activity, as they have done for the past two years.

The retail and hotel sectors have received strong invest interest this year, while the office and land sectors have been the most challenged, according to the report.

Toronto, Vancouver, Montreal and Ottawa have experienced the sharpest office vacancy increases since 2020 after previously being the tightest markets in North America.

Canada will have a harder time defying predictions of a recession due to higher interest rates, labour shortages and geopolitical risks, said JLL.