Winnipeg Real Estate Outlook 2025

Winnipeg commercial real estate transaction volumes will normalize in 2025 as lending becomes more favourable and investors re-enter the market.

Rising construction costs and decreased absorption have prompted developers to reassess future industrial projects. Vacancy in the Winnipeg office market has stabilized in recent quarters, with the suburbs continuing to outperform the downtown core, as companies continue to relocate to those areas.

The Winnipeg retail market experienced remarkable growth in 2024 and boasts the lowest vacancy rate of any commercial asset class in the city heading into 2025.

CBRE Winnipeg Managing Director Paul Kornelsen tells us what he’ll be watching for in the city’s commercial real estate market this year.

Office

We just had the much-anticipated completion of the Wawanesa Tower. Moving forward we don’t have any large-scale office developments under construction, which should help fundamentals to stabilize. Our vacancy rate increase has slowed in recent quarters and vacancy is now around 18%, and I’m definitely going to be watching to see if we have a little bit lower to go.

A big topic of conversation right now is our Skywalk and underground concourse; the latest numbers show that vacancy is 9% on the connected buildings and it’s pushing 30% in the non-connected buildings. It’s definitely an interesting trend we’ll be keeping an eye on.

There’s also the opening up of the Portage/Main intersection, which is slated for 2025, which seems shockingly ambitious for any public project that involves construction and transportation, and a Winnipeg winter in between. So I’m interested in seeing if that that will be delivered on time. What happens there will have an impact on our downtown ecosystem, because the (publicly-stated) plan is that they would close part of the underground connectivity, which could further alienate another batch of buildings from being connected to the rest of the downtown. I’ll be watching that evolve in 2025.

The Portage Place redevelopment has been given the green light from the developers True North, so that’s a good news story for that property. The project will involve tons of different partners and levels of government investment. While it won’t be done in 2025 the starting process is something we’ll be keeping an eye on as the redevelopment occurs through 2027.

We won’t be seeing an inflow of major office projects; a couple of infill ones but nothing of the scale of Wawanesa Tower. So inventory should remain flat. We’ll be tracking any redevelopment of office properties to residential. There’s not a ton of velocity for conversions, and no incentives that would help the numbers make a bit more sense. 

A large number of office towers have been trading to indigenous groups, a noteworthy trend in 2024. We had higher profile buildings in the Class B-plus market that are now owner-occupied by indigenous groups. Manitoba Metis Federation (MMF) purchased three noteworthy buildings: 200 Main, 333 Main and 191 Pioneer, the sister building to 333 Main. That helps our vacancy numbers a lot. These buildings had been almost fully empty. It will be interesting to see what that actually looks like in terms of real occupancy and  people working downtown on a daily basis.

Retail

It’s a strong retail market and there is upward pressure on rents. We’re in a phase where there’s development and a number of key projects around the city and good lease up rates there. There is upward pressure on rental rates and good retail space in the city is still very hard to come by – it’s pretty much snapped up before it gets to market.

Every quadrant of the city is seeing retail development from developers such as Qualicol, Whiteland and Hopewell. We’ve been actively involved in leasing Hopewell’s Refinery District, which finally broke ground. The first phase is only 8,000 sq. ft. but it’s notable as it is new retail concentrated in southwest Winnipeg. There has been strong interest in that site.

Industrial

Our industrial market has been another good news story. We’re hovering at 3% availability. Tenant mobility is very limited, and any product that is 18-foot clear and higher has been really hard to come by. So the market continues to have strong fundamentals. Some of the newer-built stuff has been in larger quantities. Hopewell and QuadReal had buildings built on spec in the 140k sq. ft.-plus range, which for our market is big. There has been interest in it but it’s harder to get a deal done there.

The main challenge for new industrial development is around construction costs, which are among the highest in the country. And it forces rental rates to be closer to $20 psf. The spread between existing and new build is closing, but it’s still a big leap for many businesses to make sense of the numbers at those rental rates. So we’ll mainly be seeing renewals and tenants staying in place with a decent rent increase.

Multifamily

The multifamily market was pretty steady in 2024. What we’ve seen is that there is depth of local buyers. Pretty much everything that came to market in 2024 that was of substantial size was ultimately sold or is currently conditionally sold, and there seems to be an appetite for more of that kind of product.

Construction starts have slowed a little bit due to higher costs, but overall multifamily is a strong-performing asset class and there is good demand for it.

So you’ve got three of the four asset classes have strong demand and good fundamentals. If we could figure out construction pricing that could help unlock supply and alleviate demand.