Article
Investor Belief in Canadian Commercial Real Estate Strengthens in Q1
June 27, 2025 4 Minute Read
Total Canadian commercial real estate investment volumes impressed in the first quarter, according to CBRE’s Q1 2025 Canada Investment Overview.
There are several silver linings to keep in mind in a challenging market.
Relative to the same period last year, Q1 2025 investment volumes were notably higher, with a 19.8% increase year-over-year. And the number of investment deals in Q1 totaled 1,719 transactions, an increase of 10.7% year-over-year versus Q1 2024.
“This was the best Q1 in three years excluding M&A, and marks the first year-over-year increase since Q2 2024,” says CBRE Canada Associate Research Director Evan Lee.
Industrial, Retail Are Most Active
Investment in the industrial sector totaled $2.9 billion, making it the most active asset class in the first quarter, surpassing multifamily for the first time since Q2 2024.
Retail investment volumes rose 38.3% quarter-over-quarter to total $2.3 billion in Q1 2025. Major mall transactions in Toronto, Edmonton and Vancouver contributed to the increase, lifting total retail activity well above its three-year trailing average pace.
Hotel investment volumes rose by 54.7% quarter-over-quarter, for a total of $325.5 million in Q1 2025.
Private Investors Keep Buying
Private investors remained the most active purchaser group in Canada by a significant margin in the first quarter, accounting for 56.3% of acquisitions.
The next most active buyer group were REIT/REOCs, whose share of activity increased to 18.7%, led in large part by major mall purchases by Primaris REIT.
International Investment Remains Muted
International capital investment into Canadian commercial real estate remained muted and totaled $524.9 million in Q1 2025, continuing the relatively slower pace of foreign investment seen in 2024.
Global capital inflows predominately originated from the APAC region, which accounted for 69.2% of total foreign investment in Q1 2025, followed by the Americas (24.4%) and EMEA region (6.5%).
Foreign activity in Q1 2025 was largely led by GIC’s share of a Dream Summit Industrial purchase of a GTA industrial portfolio for $257.5 million.
5 Markets See Increases
Five of 10 Canadian cities tracked saw a year-over-year increase in total commercial real estate investment.
Toronto continued to see the highest volumes of investment capital, recording $3.2 billion, for 31.5% of the national quarterly total. The next most active markets were Vancouver ($1.8B) and Montreal ($1.7B). Investment activity in Edmonton surged in Q1, with a 120.5% year-over-year increase to total $1.5 billion.
“Edmonton is a resilient market and commercial properties continue to see rental rate growth, leading investors to make bets on industrial and multifamily product,” says Lee.
Maybe, just maybe, the smart money knows that better things are on the horizon for commercial real estate fundamentals in Canada.
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