Press Release

CBRE Outlook: Big Deals and Greater Economic Certainty Could Push Commercial Real Estate Investment Volumes to a New High in 2023

February 28, 2023

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‘We are fundamentally very positive about Canadian commercial real estate, but it is also undeniable that the short term is going to be bumpy.’

Canadian commercial real estate investors will face headwinds in 2023, with tougher financing conditions and a potential economic slowdown inhibiting activity. But given the immense amount of global capital targeting real estate, and with greater certainty expected on interest rates, CBRE’s Canada Real Estate Market Outlook is forecasting an active 2023 of mergers and acquisitions and high-profile deals that could push investment volumes to an all-time high of $59.3 billion.

“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. “However, with better visibility around where interest rates are settling, 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.


  • As companies fine tune their optimal remote-office balance, office utilization and the space needed per worker will evolve to a new equilibrium. Spaces that help attract workers back to the office will be a priority. Many forward-thinking tenants will use the coming year to relocate to properties with the best amenities, commute times and sustainability profiles that are aligned with their own ESG priorities.
  • Tenants are demanding more from their spaces and prioritizing high-quality offices that support new ways of working. Not all buildings are created equal, and the bifurcation of office space will widen in 2023.
  • Demand for cheap commodity office space has evaporated and has been replaced with the need for space that enhances business productivity, encourages attendance, and facilitates collaboration. 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. office properties are more likely to be retrofitted to attract new tenants or demolished for better uses.


  • The national average industrial rental rate surged 30.9% year over year to hit $13.71 per sq. ft. at the end of 2022. 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.
  • Third-party logistics firms accounted for over 26.1 million sq. ft. of new leasing activity in Canada over the last two years. This trend is expected to continue into 2023 as more companies look to outsource their supply chain processes.


  • 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.


  • 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. These projects are multi-phased and will see centres transformed in the coming years.
  • Revenge shopping has started to cool and is anticipated to slow further in the year ahead. Inflation and elevated interest rates have started to constrain wallets and ultimately will lead 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.”

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at

In Canada, CBRE Limited employs 2,200 people in 22 locations from coast to coast. Please visit our website at