Industry leaders have given a cautious thumbs-up to the proposals
Canada’s 2025 federal budget marked a major change for commercial real estate, directing $450 billion toward new projects over five years, according to a new report from commercial advisory firm Avison Young.
“This budget marks a fundamental transition from operational spending to capital investment,” the company said, pointing to the scale of new infrastructure and development funding.
Industry leaders pointed to the budget’s “Productivity Super-deduction” as a game-changer for developers. They described it as the most significant tax incentive for commercial real estate in years, referencing the immediate 100% expensing for manufacturing and processing buildings acquired after November 4, 2025.
“A $50 million facility can now generate immediate tax deductions, potentially saving $13–15 million in present-value tax costs,” according to PwC.
Housing, city development, and broader impacts
On the housing front, Build Canada Homes received $13 billion to double annual construction, with a focus on modular and factory-built methods.
The Canada Mortgage Bond program’s expansion to $80 billion annually is expected to provide lower-cost funding for multifamily construction.
The $51 billion Build Communities Strong Fund rebrands and expands infrastructure programs, addressing bottlenecks in water, wastewater, roads, and transit—key constraints for land development.
However, the promised reduction in development charges remains tied to provincial negotiations, with no immediate relief for developers.
Industrial and defence sectors lead investment surge
Manufacturing and industrial facilities emerged as the budget’s biggest winners. The $5 billion Trade Diversification Corridors Fund aims to double non-US exports by 2035, with targeted investments in ports, railways, and airports.
Eligible projects include port expansions and rail infrastructure that catalyze logistics and warehouse development.
The government’s defence strategy also allocates $6.6 billion over five years to boost domestic production and procurement, with a focus on Canadian suppliers.
Defence spending, now at NATO’s 2% of GDP target and projected to reach 5% by 2035, is expected to drive demand for industrial land, secure office clusters, and digital infrastructure.
Major allocations for cyber defence and AI integration will increase demand for secure data centres and SCIF office space.
A new era for CRE, but execution is key
While the budget’s scale and ambition are clear, industry voices cautioned that execution and intergovernmental coordination will determine the real impact.
“If these investments roll out as planned, they’ll deliver a lasting boost to Canada’s economy,” Avison Young said. Yet, questions remain around timelines for development charge reductions and the pace of project approvals.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
