A largely positive tone was struck at the RealCapital 2025 conference in Toronto on Tuesday as over 1,000 industry pros gathered at the Metro Toronto Convention Centre to discuss debt and equity market trends and opportunities.
Here are Green Street News’ key takeaways from RealCapital 2025.
Trade-war threat
U.S. President Donald Trump’s economic and foreign policy cast a shadow as his threatened tariffs against Canadian goods and services, set to take effect next week, came up in many of the sessions.
Andrew Joyner, managing director at Tricon Residential, quantified the costs for developers if the trade war escalates.
“If, ultimately, Canada moves to a retaliatory framework on steel and aluminum, we’re moving to a 1% increase in development costs, and if we move to a retaliatory framework on everything from the U.S., we think that’s closer to 4% of development costs,” he said.
Some of those costs can be mitigated, for example, by lower costs from trades.
Mitigating risk
Slashing risk was another theme at the conference. KingSett Capital, which invests in every asset class in markets across Canada, recently has been lowering its risk profile via how it structures deal.
“In development, you can structure deals that are lower risk through preferred-equity structures and mezzanine-debt structures, so you can move down the risk curve,” chief executive Rob Kumer said.
“On the credit side, you can lend money to better borrowers with better assets, with better credit. For us, you can generate the same returns we were generating three, four years ago by taking much less risk.”
Kumer highlighted some of the opportunities, particularly in developing affordable housing.
“That’s been a big part of our business for the last couple of years,” he said. “We raised $180m in capital to do that a couple of years ago, and we’ve basically committed it all. We’ve raised another $90m, and we’re looking for another $10m before we close that, and then a follow-on raise after that. That will fund $2.5bn to $3bn worth of development because the projects are so highly levered.”
Lenders’ survey
CBRE released their survey of 37 lenders who, together, represent over $200bn in loans under management.
Jessica Harland and Joshua Sonshine, both senior vice presidents at CBRE Capital, said Trump’s tariffs are not yet registering as a primary concern, nor are they altering lending in a material way.
Some of the survey’s findings include:
- 76% of lenders plan to increase origination volume
- 70% of lenders plan to actively or very actively bid on real estate deals
- 59% of lenders were below their spending plan for 2024 in the condominium space, exceeding every other asset class
- Lender sentiment has seen a major improvement this year across asset classes, including office, but not land
- Very few lenders want to increase their exposure to land loans needed to spur rental construction
- 26% of lenders are looking to decrease their land exposure
Sonshine noted the increase to retail lending allocations is at its highest point in 10 years.
“Retail is open for business,” he said. “With many of these grocery leases being institutional and long term in nature, it does create a super-defensive and very stable opportunity for a lender. The bottom line for 2025 is, there will be a greater credit allocation to retail than any other asset class not named multifamily.”
Recession concern
Coleen Volk, chief executive of Canada Mortgage and Housing Corp., discussed strategic priorities for CMHC and potential risks facing the country’s housing market.
“Our ability to influence outcomes in the housing sector really depends on how much the government gives us in terms of resources to be able to put to use,” Volk said. “I think of our role on the housing program side as maximizing the resources they give us. My vision is a little bit murky right now because we’ll get some new political direction when Canada has a new prime minister this spring.”
“Key concerns for us would be [the] impact of tariffs particularly, and the impact of a recessionary environment on homeowners, and what that might do to supply,” she added. “Our organization is focused on supply. If there is anything that’s going to get in the way of supply, we would be very worried about that.”
Institutions see opportunity
Janet Chung, director of real estate at CPP Investments, said she’s on the hunt for opportunities.
“As a large-scale investor, we think this market at this time presents significant opportunity for us,” she said of the Canadian market.
Andrew Croll, managing director and head of global real estate Investments at TD Asset Management, said 2024’s negativity is lifting.
“As I think about 2025, I’m very optimistic that a lot of the valuation noise has adjusted, liquidity and debt markets are quite strong, fundamentals are relatively strong,” he said, while acknowledging there is some falloff in industrial leasing activity.
