The commercial market seems to be weathering the storm of the trade dispute
Investor confidence in Canada’s multi-suite residential and commercial real estate markets held firm in the second quarter of 2025, buoyed by strong demand, stable fundamentals, and resilience in key asset classes, according to Morguard Corporation’s latest market update.
“Canada’s real estate market continues to be supported by solid fundamentals that foster long-term optimism and growth,” said Angela Sahi, president and chief operating officer of Morguard. “Even amid market volatility, investor interest in high-quality industrial and office properties remains strong.”
Multi-suite residential rental properties posted a robust rebound in transaction activity, with $812 million in deals recorded in Q2 – a 39.4% increase from the previous quarter. Investor sentiment was underpinned by the sector’s long-term stability and track record of weathering economic slowdowns.
While demand is expected to cool in coming months due to reduced immigration and temporary worker inflows, alongside rising first-time homebuyer activity, asking rents are projected to continue climbing through 2026 as new supply reaches the market.
The report also noted that the industrial sector maintained strong investor interest, particularly in logistics and warehouse facilities. According to Morguard, roughly half of industrial property sales in Q2 were to users purchasing space rather than paying elevated leasing rates. Private capital groups remained active in acquiring quality assets in a less competitive environment.
Office leasing conditions remained steady, with “trophy” properties – high-quality, amenity-rich buildings in prime locations – drawing the most demand. Office rents saw modest upward pressure in these top-tier spaces.
Retail investment activity slowed following a strong start to 2025. However, Morguard reported that retail property sales have remained “surprisingly brisk” over the past year, bolstered by several large transactions earlier in the year.
Canada’s economy showed signs of cooling in Q2 after outperforming expectations in early 2025. Trade disruptions and tariffs impacted job growth, consumer spending, and business investment. Nonetheless, core inflation stayed largely under control.
“While global economic conditions continue to evolve, the Canadian real estate market is showing encouraging signs of stability,” said Keith Reading, senior director of research at Morguard. “With balanced fundamentals and continued investor interest in core sectors, the outlook for the second half of 2025 remains positive.”
Morguard’s full 2025 Canadian Economic Outlook and Market Fundamentals Second Quarter Update is available on the company’s website.
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