Canada Real Estate Outlook

Interest rate cuts could be on the horizon, but real estate markets will continue to face challenges in 2024.

February 20, 2024
  • Scott Figler
  • Heli Brecailo
  • Chad Piche
Key 2024 outlook themes:
  • Office Market: The completion of over 16m s.f. of office space nationally between 2021-2023 played a significant role in driving up vacancy, most notably in Toronto, Vancouver, and Montreal. Beyond 2024 the office construction pipeline will fall close to zero, giving demand time to catch up to supply and allowing markets to stabilize. While hybrid work has and will remain entrenched, companies are committing to office space as they look to create connectivity, culture, and collaboration.

  • Industrial Market: New deliveries approached 40m s.f. in 2023, a national record. Meanwhile demand fell to its lowest point in several years. This has moved vacancy from 1.5% nationally a year ago to 2.8%. This is a good story for tenants and for consumers, as it will contribute to lower warehousing costs within supply chains.

  • Multifamily Market: All major and medium-sized Canadian cities are impacted by the rental housing shortage, with Canada’s 16 largest metros all seeing rental vacancy under 2.4%. Municipalities are actively engaging with the private sector to devise schemes that will incentivize new housing construction. Overall, construction is on the rise with significant jumps in rental growth in each market.

  • Retail Market: With consumers returning to bricks-and-mortar locations, the retail market is seeing falling availability and rising rents. Investment volumes have recovered to pre-pandemic levels. From a rental growth standpoint, strip centres and power centres are outperforming while other retail subsectors have not seen rental growth keeping up with inflation.

Retail rental growth by subsector, 2019-2023 (2019 = 100)

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