- What Commercial property sales grew just 1% in Q1 as investors remained hesitant to transact
- Why Trade concerns and a sluggish economy weighed on the market
- What next Fallout from the tariffs is expected to be more widely felt later in the year
First-quarter property sales across Canada were roughly flat, though a big student-housing M&A deal kept volume from cratering, an analysis of Green Street data shows.
Commercial property sales worth at least $5m totaled $7.6bn across sectors in Q1, up 1% from the year prior, according to Green Street’s Sales Comps Database. Every sector besides alternative assets – which includes the $1.7bn merger – and retail saw sales tick down year over year.
Multifamily sales dipped only slightly, while the office and hotel sectors saw the biggest percentage drops. Even the industrial sector, a bulwark for the industry in recent years, lost ground.
“I don’t think things are all bad,” said Keith Reading, senior director of research at Morguard. “But uncertainty is never good for our economy and, by extension, the commercial real estate market.”
Investors remained hesitant to make deals, short-circuiting predictions that the property market would kick into gear in Q1 after a year of decline. Instead, a dormant national economy, trade tariffs and takeover threats from the U.S., and a national election appear to have capped enthusiasm – and the hangover could last into 2026.
“We were really starting to emerge, and things were starting to ramp up a little bit,” Reading said. “Inflation was under control. Borrowing costs, to some extent, were coming down. With the tariffs, we’re hit with another sort of significant obstacle in terms of economic growth.”
Student housing stands out
The alternatives sector accounted for over $2bn of dealflow, largely due to Forum Asset Management’s $1.7bn acquisition of Alignvest Student Housing REIT.
The deal represents a big bet on the emerging sector. Only 21 student-housing deals have been completed since 2023, with just seven of those exceeding $10m, according to JLL.
However, it has drawn attention to student housing as an investment opportunity, JLL senior research analyst Megan Keeler said.
“I think that the scale of the transaction was grand enough to put student housing on the radar of investors that previously wouldn’t have looked at student housing opportunities,” she said.
There’s increasing interest in converting underused office space to student or senior housing, Keeler said, noting Calgary’s municipal government and its largest university’s plan to convert four downtown office towers to residences as part of a campus expansion.
“We’re definitely hearing more conversations about how an asset type can potentially be molded into an alternative asset,” Keeler said.
Other notable deals in the sector included Chartwell Retirement Residences paying $75m to buy an independent living residence in Victoria, and a 445-acre golf course in Ajax, Ont., that traded for $45m.
Retail remains resilient
Retail property sales totaled $1.4bn in Q1, up 13% year over year. Grocery-anchored properties with essential tenants such as drugstores, banks and others have consistently maintained value, market pros said.
Large shopping centres also draw interest for their redevelopment potential and ability to drive revenue. Both were factors behind Primaris REIT’s $416m acquisition this month of Lime Ridge Mall in Hamilton.
The biggest retail deal in Q1 was Primaris’ $585m acquisition of Ivanhoé Cambridge’s 2m sq ft portfolio of shopping centres in Oshawa, Ont., and Edmonton. The next largest was Valley Properties’ $137m sale of a Metro Vancouver shopping centre.
Industrial continues to struggle
Industrial property sales fell 16%, dipping below $2bn in a quarter for the first time in five years. Just 91 deals closed from January to March, down from 125 in Q1 2024.
Once the darling of Canadian commercial real estate, the industrial sector is weathering higher vacancy rates across the country, giving tenants more pricing power.
The largest industrial deal of the quarter was Pure Industrial REIT’s $258m portfolio sale of 10 GTA properties to Dream Industrial.
Multifamily volume down
The volume of multifamily deals dipped 3% to $1.4bn year over year, though the sector remains among the most sought-after, pros said.
Amid economic uncertainty and the national housing shortage, investors are gravitating to properties viewed as safe. Apartments fall into that category, as they typically generate steady income over time.
“I think this slight decline [in Q1] was just a matter of not enough quality assets available for purchasers to buy, as opposed to any other kind of signal from the market,” said Andrew Petrozzi, director and head of Canada research for Newmark.
Among the top multifamily deals that closed in Q1 was Société immobilière Bélanger’s $143m purchase of a portfolio of Québec City apartment buildings from Logisco.
Other notable deals include Boardwalk REIT’s sale of three Edmonton apartments for $80m; Canadian Apartment Properties REIT’s acquisition of the MacLaren, also in Edmonton, for $79.4m; and Capreit’s $73.8m sale of Brampton Village, in Brampton, to Lankin Investments.
Office challenges persist
Just 13 office properties with a combined value of $250m sold in Q1, a 70% year-over-year drop – the largest decline across property types.
The dearth of deals illustrates investor reluctance to part with trophy office assets, which remain attractive to tenants and can still field a bidding pool. Office properties lacking upgraded amenities and/or in less desirable locations draw much less interest.
What has sold of late are office buildings that can be converted to other uses such as housing. That trend has been seen most in Calgary and Edmonton.
Among the deals completed this quarter, Fraser Health Authority sold 32071 South Fraser Way in Abbotsford, B.C., for $28m and Davpart offloaded Warden City Centre in Markham for $22.1m.
Hotel sales down
The smallest sector for the quarter, by volume, was hotels, with just under $240m. Roughly half of the total came from the sale of the Hyatt Regency Calgary for at least $120m, the second-largest single-property hotel deal in city history. Another big deal was InnVest’s sale of its 51% majority interest in Hilton Québec in Québec City for $175m.
Green Street News’ analysis is based on property sales of $5m and up, real estate mergers and acquisitions, and confidential transactions. The main sectors are office, retail (including malls, strip centres and net-lease properties), traditional apartments, industrial (including manufacturing facilities and outdoor storage) and land (which encompasses raw land or sites with construction already started).
The alternatives sector captures self-storage data centres, student housing, life science, healthcare (including senior housing), cold-storage warehouses, ground leases, gaming, manufactured-home parks and other niche property types.
