Canada Commercial Real Estate Market Report and Forecast 2024-2032

Canada Commercial Real Estate Market Size

The Canada commercial real estate market size was valued at USD 75.62 billion in 2023. The market is further projected to grow at a CAGR of 5.00% between 2024 and 2032, reaching a value of USD 117.95 billion by 2032.

Key Takeaways

• In 2022, the global commercial real estate market was valued at USD 35 trillion, surpassing market value of 2021.

• In 2022, the listed real estate market was about USD 3.2 trillion, with the North American region making up the largest share.

• In 2022, the value of commercial real estate investment in Canada reached almost 59 billion Canadian dollars.

Properties used for business purposes, such as office buildings, retail stores, warehouses, and industrial properties, are referred to as commercial real estate. The global commercial real estate market is anticipated to expand due to the increasing population density in urban areas, which leads to a higher demand for commercial spaces, such as offices, retail stores, and industrial properties.

Studies show that in the global commercial real estate market, North America accounts for most of the real estate value because of the region’s rising demand for office spaces, rapidly growing e-commerce sector, and high employment rates. In North America, the Canada commercial real estate market is growing rapidly and is predicted to flourish in the future due to rapid population growth, tight labour markets, and elevated household savings.

Key Trends and Developments

Low interest rates, development of mixed-use real estate, and increasing use of modern technologies in real estate are expanding the Canada commercial real estate market development

January 2024

StatCan and Rentals.ca have announced the launch of a new tool to track the rental market in Canada for residential and commercial real estate. The tool will provide data on rental prices and vacancy rates across the country, allowing renters and landlords to make more informed decisions.

December 2023

Colliers signed the World Green Building Council's ‘Net Zero Carbon Buildings Commitment.’ The company aims to achieve council’s goal using 100% renewable energy in its operations.

September 2023

A real estate investment trust, VICI Properties Inc., bought the real estate assets of Century Casinos, Inc.'s in Alberta for USD 164.7 million. This move demonstrates the company’s drive to capture international markets.

June 2023

Prologis, Inc. acquired nearly 14 million square feet of industrial properties from opportunistic real estate funds affiliated with Blackstone for USD 3.1 billion. The acquisition aims to expand company’s portfolio.

Low interest rates in commercial real estate

Low interest rates are attracting organisations to explore commercial real estate opportunities across a range of industries. Commercial real estate loans in Northern Canada and British Columbia can have interest rates as low as 2.231% and 4% respectively which is generally regarded as a good interest rate.

Rising development of mixed-use real estate

One of the Canada commercial real estate market trends is the development of mixed-use real estate. These projects integrate commercial, residential, and retail spaces within a single complex, fostering the creation of vibrant and dynamic neighbourhoods.

Growing emphasis on use of modern technologies in real estate

Real estate firms are coming up with technologies to improve user experiences and boost sustainability and efficiency. Noteworthy technologies include remote monitoring which contributes to improved occupants’ safety and streamlined operations. These technological innovations are poised to act as a catalyst for the Canada commercial real estate market growth.

Increasing government initiatives

The Canadian government has introduced several significant funding initiatives and policies that have an impact on the commercial real estate sector. One of these is the provision of substantial funding for housing construction, which presents opportunities for builders and investors in commercial real estate market in Canada.

The trend of mixed-use estate development is fuelled by the need for convenience and the optimisation of land use in urban areas. Moreover, mixed-use developments align with the rising demand for live-work-play environments, offering individuals the opportunity to reside, work, and access amenities in proximity. Additionally, the government has launched the Smart Buildings Initiative, led by Public Services and Procurement Canada, with the goal of enhancing the energy efficiency of federal buildings, reducing greenhouse gas emissions, and cutting energy costs. These factors impact the Canada commercial real estate market value.

Furthermore, the Federal Lands Initiative, a USD 200 million fund overseen by the Canada Mortgage and Housing Corporation (CMHC), supports the transfer of surplus federal lands and buildings to eligible proponents for development or renovation, particularly for use as affordable and sustainable housing. These initiatives and policies underscore the government's commitment to influencing and supporting the Canada commercial real estate market demand, particularly in the realms of housing, energy efficiency, and sustainable development.

Canada Commercial Real Estate Market Segmentation

Canada Commercial Real Estate Market Report and Forecast 2024-2032 offers a detailed analysis of the market based on the following segments:

Market Breakup by Type

• Office

• Retail

• Hospitality 

• Industrial

• Others

Market Breakup by Region

• Northern Canada

• British Columbia

• Alberta

• The Prairies

• Central Canada

• Atlantic Canada

Office real estate contributes to market growth due to low office vacancy rates in the country

According to Canada commercial real estate market analysis, the office real estate is expected to propel the market growth in the forecast period. Canadian cities stand out in North America with impressively low office vacancy rates, primarily attributed to a surge in employment rates that demands an expanded corporate footprint. In 2022, Microsoft secured a substantial deal, acquiring approximately 4,00,000 square feet at the B6 building in Vancouver, North America, earmarked for office space. Construction of such large corporate offices can boost the Canada commercial real estate market demand.

On the other hand, industrial real estate refers to properties used for industrial activities, including production, manufacturing, and the storage and distribution of goods, or warehousing. Growing export and import activity is one of the key factors driving the demand for industrial real estate, especially warehouse space, making it a profitable investment opportunity. Additionally, as per the Canada commercial real estate market forecast, industrial sector is emerging as the fastest-growing segment because the e-commerce companies, such as Amazon Canada, Ebay Canada, and Walmart require large inventories or warehousing space to fulfil their online orders and to keep the product returns.

Competitive Landscape of Canada Commercial Real Estate Industry

The market players are investing in real estate and incorporating advance technologies to stay ahead in the competition, further increasing their acquisition efforts.

Jones Lang LaSalle IP, Inc. was established in 1999 and is based in United States. It is a distinguished global real estate services firm, which specialises in providing comprehensive real estate and investment management services. Its offerings encompass tenant representation, property management, agency leasing, finance, and valuation services.

Westbank Corp, a prominent real estate development entity, was founded in 1992 with headquarters in Vancouver, Canada. Westbank has earned global recognition as a leader in luxury residential and mixed-use projects with a strategic focus on large-scale developments in Vancouver, Toronto, Seattle, Tokyo, and San Jose, among other urban centres.

Colliers International Group Inc. was established in 1898 and is headquartered in Toronto, Canada. It is an esteemed investment management company with a vast global presence. With approximately 18,000 employees operating from four hundred offices across sixty-five countries, the company is a powerhouse in commercial real estate services. It offers a comprehensive suite of services, including brokerage, property, investment, and project management.

Avison Young (Canada) Inc. was founded in 1978 and is based in Ontario, Canada. It is a commercial real estate company that provides consulting, advisory, lease administration, investment and asset management, and mortgage services to customers worldwide. The company's services cover a wide range of sectors, including office, retail, industrial, multi-family, and hospitality.

Other key players in the Canada commercial real estate market analysis include Onni Property Management Services Ltd., Cadillac Fairview Corporation Limited, Brookfield Corp., Anthem Properties Group Ltd., Canada Land Company Limited, and Shindico, among others.

Alberta region holds a significant market share due to the increasing demand for commercial spaces

Alberta  is anticipated to increase the Canada commercial real estate market share in the forecast period due to high demand for commercial spaces in urban centres. This can lead to enhanced lease rates and lower vacancies. The industrial sector is growing in Canada, and out-of-province investors are looking towards Alberta because the average lease rates have risen 3.5% year-over-year in some areas, and it can generate higher rents. Additionally, the ongoing infrastructure developments in Alberta, such as transit expansions and road enhancements, are set to bolster property values in proximity to these projects.

On the other hand, the Canada commercial real estate market value is anticipated to increase because of the rapid industrialisation in North Canada. For instance, in 2023, Toronto's real estate asset management agency, CreateTO, unveiled plans for a groundbreaking mass timber rental building on Dundas Street West. This 10-storey structure, featuring 100 rental units, allocated the ground floor spanning over 2,000 square feet for commercial purposes. Thus, the demand for commercial real estate is expected to grow in Canadian regions, thus increasing the Canada commercial real estate market share in the forecast period.

Key Highlights of the Report