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Canadian Real Estate Investment Forecast to Hit a Record High $59.3B in 2023

March 1, 2023 5 Minute Read

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It’s going to be a bit of a bumpy first half of 2023 for Canadian commercial real estate, with tougher financing conditions and a potential economic slowdown inhibiting activity.

But by year’s end big deals and more visibility on interest rates should see transactions ramp up considerably, setting the stage for an all-time high for investment volume of $59.3 billion for 2023.

That’s a key takeaway from CBRE’s new Canada Real Estate Market Outlook.

“We are fundamentally very positive about Canadian commercial real estate but it also undeniable that the short term is going to be very bumpy,” says CBRE Canada Chairman Paul Morassutti. “But we expect that pricing expectations will re-calibrate in 2023, deal flow will pick up, and by Q3 and Q4 we should see much more robust investment activity.”

Here is a sector-by-sector breakdown of commercial real estate trends that CBRE will be watching for this year. Download our new Canada Real Estate Market Outlook to read more.

Office Continues to Evolve

  • As companies fine tune their optimal remote-office balance, office utilization and the space needed per worker will reach a new equilibrium. Spaces that help attract workers back to the office will be a priority.
  • Tenants are demanding more from spaces and prioritizing offices that support new ways of working. Not all buildings are created equal, and the bifurcation of office space will widen in 2023.
  • As vacancy continues to increase, the prospects for older office space become more challenging. Conversions to residential are increasingly being discussed, but, to date, feasible opportunities are limited.

Industrial Growth Moderates

  • Industrial rents will continue to be driven up by strong levels of demand as well as from the influx of new builds that command higher asking rents due to increased construction costs.
  • For the highly desired big box segment, available space remains scarce and will come at a premium. Despite a record 46.4 million sq. ft. of new supply expected to deliver in 2023, the industrial market will remain undersupplied relative to demand.
  • Robust pre-leasing activity and a conservative approach to construction in Canada means the national availability rate is forecast to only rise modestly by 40 bps to 2.0% in 2023. Industrial construction starts are expected to ease in 2023 as markets across Canada work through their existing development pipelines.
  • Speculative construction may also become less viable amid elevated financing and construction costs, in addition to rising capitalization rates.



With better visibility around interest rates, pricing expectations will recalibrate in 2023, deal flow will pick up, and by Q3 and Q4 we should see more robust investment activity. - Paul Morassutti

Multifamily Stays Strong

  • Growing demand for multifamily rental compressed the overall vacancy rate in Canada to a 20-year low of 2.0% in 2022. Elevated demand levels will continue to persist and drive vacancy even lower in 2023, led by higher immigration targets.
  • Rising office attendance is also driving increased demand for urban rental product as workers returning to the office look to minimize commute times.
  • A continued supply-demand imbalance is expected to push multifamily rents higher in 2023, with rent growth forecast to remain largely in line with last year’s record pace.

Brick and Mortar Retail is Resurgent

  • More half of the 30 top performing regional shopping malls in Canada are undergoing redevelopment, which will add thousands of residential units to these properties.
  • Revenge shopping has started to cool and is anticipated to slow further in the year ahead. Inflation and elevated interest rates have constrained wallets and led to a more cautious consumer in 2023.
  • Changing behaviours will redefine new growth opportunities for retailers, especially among the value category, as consumers become more cost-conscious. Brands will need to differentiate their products or provide a higher quality of service in the year ahead to capture consumer attention and dollars.
  • Retail foot traffic levels have largely returned to pre-pandemic levels with consumers eager to engage in more lively, personalized shopping experiences that cannot be offered online.


“While it is widely assumed that younger consumers are highly engaged with e-commerce, Gen Zers are less likely to shop online than millennials, CBRE research shows,” says Morassutti. “This indicates that despite being digital natives, even the youngest consumers are choosing to shop in-store. So much for the death of retail.”

Market Outlook 2023 Download

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