Scott Speirs is a seasoned broker, with more than 20 years of experience negotiating deals for his clients.
As vice chair of CBRE Montréal’s national investment team, he’s executed some of the city’s largest real estate transactions.
Speirs spoke to Green Street News about what factors will influence the commercial real estate market in the year ahead, sharing his insights on the market’s trajectory, from navigating uncertainties to bold predictions for 2025.
How does 2024’s market compare to 2023’s, and what’s the outlook for 2025?
The market has shown notable improvement compared to 2023, though we’re still in a transitional phase as we recover from interest-rate impacts.
Investment volumes have increased, with particular strength in multifamily, followed by the industrial and retail sectors. While uncertainty persists, market sentiment is gradually improving. The primary source of uncertainty centers on interest rates and the cadence of potential cuts in 2025. Major banks have widely divergent views, with up to 100 basis-points difference in their overnight rate forecasts for 2025. We’re also seeing uncertainty around market fundamentals, particularly regarding the economy and rental growth in industrial and multi-residential sectors.
What’s your perspective on the current challenges in the multi-residential sector?
The recent reduction in immigration numbers and caps on international students have created some market anxiety. However, it’s crucial to communicate that the fundamental drivers remain largely unchanged. In fact, despite the increase in tuition for international students, there has been almost no impact to enrolment.
Looking at the broader picture, Canada continues to perform well globally. Despite the recent reduction to immigration targets, we’re still expected to lead G7 nations over the next five years in population and employment growth. Canada’s relatively robust economy, stability and growth, coupled with a lower Canadian dollar, should continue to drive international investment interest.
What strategies is CBRE implementing for 2025?
Our primary focus is providing accurate, best-in-class advice to our clients. For marketed assets, our strategy emphasizes precise pricing guidance and fostering a highly competitive bidding environment. We leverage our deep relationships with both institutional and private capital investors to maximize value for our clients.
In terms of opportunities in the market, we’re particularly bullish on multifamily, grocery-anchored retail assets and industrial properties with long-term leases, with strong covenant or small-bay product with below-market rents. For investors prepared to go up the risk curve, we recommend well-located, high-quality office at appropriate pricing.
What opportunities do you foresee in the industrial sector for 2025?
The industrial sector presents interesting opportunities, particularly in small-bay, multi-tenant properties where rents are well below market rates. However, we’re seeing some downward pressure on rents overall following an enormous runup over the past four to five years. The recent sale of [the] Petra east end portfolio to KingSett Capital [and Candev Immobilia] exemplifies the ongoing interest in this sector.
When evaluating industrial investments, it’s crucial to look beyond asset-class generalizations. Small-bay, multi-tenant industrial properties often present lower-risk profiles compared to single-tenant facilities. Success in this sector requires careful analysis of specific property characteristics rather than broad sector assumptions.
You mentioned that your predictions for 2025 are “bold.” What are your bold predictions for 2025?
I anticipate the reemergence of the office sector in Montréal and, more generally, in Canada. The house view at CBRE is that we believe the market has hit bottom from both a leasing and investment perspective.
Our team completed nine office sales in the GMA last year, and we expect similar or better performance in 2025. In particular, we expect to see larger, high-quality properties trade and wouldn’t be surprised to see institutional capital return to the asset class.
“I anticipate the reemergence of the office sector in Montréal and, more generally, in Canada”
The flight-to-quality trend continues, with AAA vacancy rates in downtown Montréal hovering around 6% to 7%, near historical positive levels. Companies increasingly are focused on high-quality, amenity-rich buildings to attract employees back to the office. We’re also seeing interesting activity in the conversion space, with four of our recent sales targeting residential conversion.
Additionally, we’re noticing user-investors acquiring buildings, particularly in the B- and C-class categories, while higher-quality buildings continue to attract traditional investors.
