After a summer hiatus, we’re back with fresh insights on the Canadian commercial real estate market as it enters a pivotal phase in 2025. With shifting economic conditions, evolving ESG policies, and rising interest in multifamily, retail, and office spaces, investors need data-driven insights to stay ahead. This blog unpacks the latest market forecasts, investment trends, and mortgage updates shaping Canada’s commercial real estate landscape, helping you navigate opportunities and risks with confidence.

Executive snapshot (Jun–Aug 2025)

• Tariffs + macro: US tariff uncertainty nudged Canada’s outlook softer; BoC’s July MPR (Monetary Policy Report) pencils in ~1% annualized growth in H2/25 under the “current tariff scenario.” Q1 growth was temporarily strong (pre-tariff export pull-forward); Q2 likely flat/weak. Inflation is near 2% but underlying pressures are firmer.

  Sources: Bank of Canada - Monetary Policy Report—July 2025

• Labour & GDP nowcast: StatCan’s advance estimate shows +0.1% m/m GDP for June; July’s LFS recorded –41k jobs, unemployment at 6.9%.

  Sources: Statistics Canada - Gross domestic product by industry

  May 2025, Statistic Canada-Labour Force Survey, July 2025

• Capital markets & cap rates: Q2 cap-rate report shows a cautious bid: all-property cap ~6.66%, Industrial A/B ~5.91%/6.44%, office caps higher across quality tiers; investment volume still selective. Mortgage spreads and available proceeds remain tightly underwritten.

  Source: CBRE-Canadian Cap Rates & Investment Insights Q2 2025

• Sectors:

• Office: Plateauing—vacancy has moved within a tight 20 bps band for ~18 months; sublet down 26% from peak; construction at a 20-year low (2.8M sf). Trophy assets materially out-perform.

  Source: CBRE Canada Office Figures Q2 2025

• Industrial: Supply deliveries heavy in Q2 (7.1M sf), availability edging up, but pre-leasing rebounded to 52.9%; Alberta/Waterloo/Montreal strong. Trade uncertainty is a watch item.

  Source: CBRE Canada Industrial Figures Q2 2025

• Retail: Local snapshots show firming rents/limited new supply in several markets (e.g., Victoria). National H1 rent survey released mid-Aug.

  Source: CBRE Victoria Retail Figures Q2 2025

• Multifamily: CMHC’s Mid-Year Rental Market Update (Jul 8) flags continued tightness; policy shifts (immigration caps; CMHC program changes) are altering near-term demand/financing dynamics.

  Source: CMHC 2025 Mid-Year Rental Market Update

• Debt & mortgages: CMHC raised multi-unit MLI (Mortgage Loan Insurance) premiums effective Jul 14 and standardized pricing across products; construction and affordability lenses (MLI Select) still rewarded, but economics tightened.

  Source: CMHC to Update Multi-Unit Mortgage Loan Insurance Premiums

• ESG & policy: Final anti-greenwashing guidelines (June) now require robust substantiation for environmental claims; valuation practice is evolving to reflect decarbonization performance.

  Source: Altus - The Path To Properly Reflecting Decarbonization Efforts In Canadian CRE Valuations

Insights on investment, commercial mortgages, ESG adoption & market disruptions

• Tariffs, rates, and CRE sentiment (Jul–Aug): CBRE’s Monthly Market Commentary frames July as “Canada caught a break” (tariff rhetoric paused; credit spreads stabilized), then August as “confidence is king” (elevated tariff backdrop, cautious lenders, selective buyers). Useful read-through for pricing, spreads, and lender appetite.

  Source: Cushman & Wakefield - Canada Office Marketbeat Q2 2025

• Cap-rate/volume pulse (Q2 2025): National all-property cap ~6.66%; industrial remains the tightest sector; office yields higher with pronounced quality bifurcation. Report also summarizes debt costs/spreads by asset and term.

  Source: CMHC to Update Multi-Unit Mortgage Loan Insurance Premiums

• Commercial mortgages—program changes: CMHC updated multi-unit insurance premiums (effective Jul 14), shifting economics for both MLI Market and MLI Select; read this alongside lender notes to gauge proceeds/DSCR impacts.

  Source: CMHC to Update Multi-Unit Mortgage Loan Insurance Premiums

• ESG adoption—valuation & disclosure:

• Valuation practice: Altus outlines methods to reflect decarbonization in CRE valuations—growing linkage between capex/obsolescence risk and value. (Jun 24)

  Source: Altus - The Path To Properly Reflecting Decarbonization Efforts In Canadian CRE Valuations

• Claims & compliance: Competition Bureau’s final environmental-claims guidelines (June) operationalize 2024 Act amendments—material for marketing, investor reporting, and green-leasing.

• Source: Government of Canada - Competition Bureau issues final guidelines regarding environmental claims

Latest economic & real-estate insights across Canada (macro → sectors)

• Macro: BoC’s July MPR (Monetary Policy Report): tariff shock creates a soft H2/25 (~1% annualized); Q1 strength (2.2%) faded in Q2; risk bands include de-escalation/escalation scenarios.

  Source: Scenario assumptions: Monetary Policy Report - July 2025 - Canadian economy- Bank of Canada

• GDP nowcast: StatCan advance GDP +0.1% m/m for June (release Jul 31).

  Source: Gross domestic product by industry, May 2025

• Office: Market plateau; sublet down 26.1% from peak; construction 2.8M sf (20-yr low); trophy/Class A out-perform; conversions continue. (Q2)

  Source: Canada Office Figures Q2 2025

• Industrial: 7.1M sf of Q2 completions (Toronto led); pre-leasing 52.9%; availability edging up as big-box pipeline delivers.

  Source: Canada Industrial Figures Q2 2025

• Retail: Examples of tightening conditions and rising asking rents in several CMAs (e.g., Victoria); CBRE’s national retail rent survey (H1) posted in August.

  Source: CBRE Victoria Retail Figures Q2 2025

• Multifamily: CMHC mid-year update: persistent tightness; alternative data shows pressure points by region.

  Source: CMHC 2025 Mid-Year Rental Market Update

Forecasts & market views shaping late-2025 and beyond

• BoC baseline: Growth subdued in H2/25; uncertainty around US tariff path dominates risk bands.

  Source: Outlook: Bank of Canada - Monetary Policy Report—July 2025

• Street views: TD Economics’ Aug note: tariff shock felt, but 2025 may print ~1.3% real GDP (yr avg), with 0.6% Q4/Q4—implying a weak underlying pace.

  Source: TD Economics - Addressing Issues Impacting the Economic and Financial Outlook

• Housing supply & affordability math: CMHC’s updated supply framework (Jun) says Canada needs ~430k–480k housing starts annually to 2035 to restore affordability—well above current run-rate; informs multifamily demand durability and policy bias.

  Source: Canada’s Housing Supply Shortages Moving to a New Framework

• Cap-rate trajectory: Q2 report shows stabilization in many segments with ongoing bid-ask tension; industrial most resilient, office repricing still sorting by quality/location.

  Source: CBRE-Canadian Cap Rates & Investment Insights Q2 2025

• Office cost context: With construction at a 20-yr low, near-term fit-out and occupancy decisions remain tenant-favouring outside trophy stock; landlords leaning into amenity/capex to defend NOI. (Market figures Q2)

  Source: Canada Office Figures Q2 2025

Pressing issues: housing, migration, trade barriers, greenwashing, broader shifts

• Housing & migration policy: IRCC’s 2025 plan caps study permits at ~437k and targets a reduction in temporary residents, shaping near-term rental demand in student-heavy CMAs. Early reads show inbound flows slowing.

  Source: 2025 provincial and territorial allocations under the international student cap

  Notice – Supplementary Information for the 2025-2027 Immigration Levels Plan

• Trade barriers / tariff overhang: BoC and bank research highlight elevated US tariffs as a key headwind muddying the outlook and business confidence. CRE pricing/underwriting remains conservative while spreads normalize only slowly.

  Source: Outlook: Bank of Canada - Monetary Policy Report—July 2025

• Greenwashing enforcement: Final Competition Bureau guidelines (June) tighten standards for environmental claims—relevant to disclosures, marketing, and sustainable finance narratives.

• Source: Government of Canada - Competition Bureau issues final guidelines regarding environmental claims

• Decarbonization as value driver: Valuation practice is moving to explicitly reflect retrofit pathways/transition risk, with more rigorous data demands from lenders and buyers.

• Source: Altus - The Path To Properly Reflecting Decarbonization Efforts In Canadian CRE Valuations

Must-reads (Jun–Aug 2025)

• Bank of Canada – Monetary Policy Report (Jul 2025): tariff scenarios, growth/inflation outlook.

• CBRE – Canada Cap Rates & Investment Insights (Q2 2025): national cap-rate tables + debt commentary.

• CBRE – Monthly Market Commentary (Jul 29 & Aug 27): macro/CRE pulse incl. tariff impacts and lender sentiment.

• StatCan – GDP & Labour (Jul–Aug releases): June GDP advance; July LFS.

• CBRE – Office Figures Q2 2025: plateau, sublet down, construction at 20-yr low.

• CBRE – Industrial Figures Q2 2025: heavy deliveries, pre-leasing recovery.

• CMHC – Mid-Year Rental Market Update (Jul 8) & multi-unit premium changes (Jul 3).

• Competition Bureau – Environmental claims guidance (Jun 5).

• Altus – Decarbonization in CRE valuations (Jun 24).

Canada’s commercial real estate sector continues to adapt to economic shifts, policy changes, and global market pressures. By staying informed on investment trends, ESG adoption, and emerging opportunities, you can make smarter decisions in 2025 and beyond. Explore the full reports linked throughout this blog to dive deeper into the data and insights driving the future of Canadian commercial real estate.

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