Commercial Real Estate Intelligence

Ontario remains Canada's largest provincial commercial real estate market, but investment opportunities are not limited to downtown Toronto or the traditional GTA core.

Population patterns, transportation infrastructure, employment, housing demand and the expansion of communities outside major urban centres continue to influence where commercial real estate demand may emerge.

For investors, understanding these changes can help identify markets where future demand may support retail, industrial, multifamily, seniors housing and development opportunities.

Ontario's Long Term Population Story

Population growth is one of the fundamental drivers of real estate demand.

Ontario's Ministry of Finance reference projection estimates the province's population could grow from approximately 16.3 million in 2025 to more than 20.2 million by 2051.

Importantly, this growth will not be distributed evenly. Different municipalities will experience different combinations of population growth, household formation, employment growth, infrastructure investment and development activity.

That creates opportunities to look beyond provincial averages and focus on individual communities. However, high land values and development costs can make investment economics challenging in certain locations.

This can create opportunities in established suburban markets where investors can identify:

• Intensification opportunities
• Mixed use redevelopment
• Neighbourhood retail
• Multifamily
• Industrial properties
• Transit oriented development

Existing properties with future redevelopment potential may be interesting where investors can generate income while pursuing a longer term strategy.

The Highway 401 and 400-Series Corridors

Transportation infrastructure remains fundamental to Ontario commercial real estate.

Markets connected to Highways 401, 400, 404, 407, 410, 427 and other major transportation routes can benefit from access to labour, consumers and regional distribution networks.

For industrial investors in particular, important considerations include:

• Highway access
• Available land
• Municipal servicing
• Power availability
• Labour
• Transportation infrastructure
• Proximity to major population centres

As industrial requirements become increasingly sophisticated, infrastructure can sometimes be as important as the land itself.

Southwestern Ontario

Markets across Southwestern Ontario can provide an alternative to higher cost GTA locations.

Communities connected to Highway 401 and Highway 402 can offer access to both the Greater Toronto Area and important U.S. border crossings.

Industrial, manufacturing, logistics and development opportunities may emerge where serviced employment land, transportation infrastructure and available power align with user demand.

Secondary and Regional Ontario Markets

Another area worth monitoring is Ontario's regional and secondary markets.

As communities grow, additional population can create demand for:

• Grocery and necessity retail
• Medical services
• Rental housing
• Senior housing
• Industrial space
• Storage
• Professional services
• Mixed-use development

These markets can sometimes offer different acquisition economics than larger metropolitan areas. However, smaller markets require careful analysis of local demand, employment, tenant depth and exit liquidity.

Housing and Multifamily

Ontario's housing requirements remain an important long-term consideration.

Population growth, household formation and housing affordability can support demand for rental housing and new residential development.

But strong housing demand alone does not make every project financially viable. Investors must also consider:

• Land cost
• Development charges
• Construction costs
• Financing
• Approval timelines
• Rental rates
• Operating costs
• Local supply

Development economics remain highly location specific.

Seniors Housing and Demographics

Population growth is only one demographic trend affecting real estate.

Ontario's evolving age profile may also influence demand for retirement communities, seniors housing, and healthcare related properties.

The strongest opportunities will typically require careful analysis of local demographics, existing supply, affordability and access to healthcare and community services.

Retail Follows Households

Residential growth can eventually create additional demand for retail and services. New communities need:

• Food
• Healthcare
• Pharmacy
• Personal services
• Restaurants
• Childcare
• Professional services

This can create opportunities for neighbourhood retail and mixed use developments in growing communities.

Follow the Fundamentals

Investors looking across Ontario should avoid relying on population growth alone. A stronger framework is to evaluate:

Population + Employment + Infrastructure + Servicing + Housing + Commercial Demand

When several of these factors align, a market may provide a stronger foundation for long term commercial real estate investment.

This material is provided for general informational and educational purposes only and does not constitute investment advice. Demographic projections and market conditions can change.

Commercial real estate does not operate independently from the capital markets.

The value investors are willing to pay for a property is influenced by the income it generates, but also by interest rates, available financing, investor return requirements and expectations about future growth.

Understanding these relationships can help investors make sense of changing property values and transaction activity.

Interest Rates Affect the Cost of Capital

Most commercial properties use some combination of debt and investor equity.

When borrowing costs rise, the cost of acquiring or refinancing property can increase. This can affect:

• Mortgage payments
• Debt service coverage
• Available loan proceeds
• Investor cash flow
• Development feasibility
• Property values

When financing conditions improve, some of these pressures may ease.

However, the Bank of Canada overnight rate is not the same as the interest rate a commercial property owner will receive from a lender. Commercial mortgage pricing can also reflect bond yields, credit spreads, property quality, leverage, borrower strength and loan structure.

Understanding Leverage

Consider a simplified $10 million property acquisition. The investment might be financed with:

$6 million debt + $4 million investor equity

This use of borrowed money is known as leverage.

If the property's value and income increase, leverage can potentially enhance equity returns. But the reverse is also true — if property income falls, financing costs rise or property values decline, leverage can magnify risk.

Interest Rates and Cap Rates

Interest rates and capitalization rates are related, but they do not move in perfect alignment.

A cap rate reflects the relationship between a property's Net Operating Income and value.

Property Value = NOI ÷ Cap Rate

Consider a property generating $700,000 of NOI.

• At a 7% cap rate: $700,000 ÷ 7% = $10,000,000
• At an 8% cap rate: $700,000 ÷ 8% = $8,750,000

The property generates the same NOI, but the assumed market cap rate results in a very different valuation. This demonstrates why exit cap rate assumptions can materially affect projected investment returns.

Lending Conditions Matter

The availability of financing can be just as important as the interest rate itself. Lenders may evaluate:

• Property type
• Location
• Occupancy
• Tenant quality
• Borrower experience
• Loan-to-value
• Debt-service coverage
• Lease maturity
• Construction risk
• Sponsor equity

Two properties with similar values may therefore receive very different financing terms.

Investor Expectations Influence Pricing

Investors compare commercial real estate with other uses of capital.

If relatively low risk investments offer higher yields, investors may require higher expected returns from commercial real estate to compensate for property, execution and liquidity risk. This can influence the price investors are willing to pay.

Conversely, when investors become more confident about income growth or future property values, demand for certain assets may increase.

Why Transactions Can Slow

Periods of rapid market change can create a gap between buyers and sellers.

A seller may continue to expect yesterday's valuation. A buyer may underwrite based on today's financing costs and required returns. Until expectations become better aligned, transaction volume can decline.

Greater transaction activity can eventually improve price discovery by providing the market with more evidence of what buyers are actually willing to pay.

What Investors Should Review

When evaluating an investment in today's capital markets, consider:

• Current Debt — What financing is already in place?
• Debt Maturity — When must the loan be refinanced?
• Interest Rate — Is the debt fixed or variable?
• Loan-to-Value — How much leverage is being used?
• Debt-Service Coverage — Does the property generate sufficient income to service its obligations?
• Refinancing Assumptions — What future borrowing terms have been assumed?
• Exit Cap Rate — What valuation assumption is being used when the property is eventually sold?

This material is for general educational purposes only and does not constitute investment or financial advice.

Canada's rental housing market is entering a new phase. Strong long term housing demand remains, but a wave of new construction is creating a more selective investment environment.

Purpose-built rental housing has emerged as one of the most closely watched segments of Canadian commercial real estate. Years of population growth, housing affordability challenges and limited rental supply encouraged developers and institutional investors to increase investment in new rental communities.

The result is a significant expansion of Canada's rental construction pipeline.

Canada recorded historically high levels of rental construction in recent years. CMHC reported that housing starts increased 6% in 2025, driven largely by record rental construction and growth in missing middle housing. Purpose built rentals continue to represent the largest source of new housing supply, with many projects currently under construction expected to be completed through 2028.

But the market is changing.

From Rental Shortage to a More Balanced Market

The national purpose-built rental vacancy rate increased from 2.2% in 2024 to 3.1% in 2025, according to CMHC. During 2026, rental markets have continued to ease as new apartments are completed and population growth moderates. Asking rents have also softened in several major markets.

For investors, this does not necessarily eliminate the long term rental housing opportunity. It does mean that simply owning or developing rental apartments may no longer be enough.

The next phase is likely to place greater importance on location, basis, affordability, unit design and operating performance.

Well located projects near employment, transit, education and community services may perform very differently from projects entering markets with significant competing supply.

Why Purpose-Built Rental Remains Important

Homeownership remains difficult for many Canadian households. Elevated home prices, mortgage qualification requirements and economic uncertainty can keep households in rental accommodation longer.

CMHC expects many households to continue delaying home purchases and remaining renters, even as overall rental market conditions become more balanced. Housing affordability also remains one of Canada's largest structural challenges.

This creates a fundamental distinction for investors:

Short-term rental conditions can soften while long-term housing demand remains significant.

The investment question increasingly becomes not simply whether Canada needs additional housing, but what type of housing is needed, where it should be located and at what rent level it can be absorbed.

What Investors Should Evaluate

When reviewing a purpose-built rental opportunity, investors may want to consider several factors.

• Location and demographics — Population trends, household formation, employment, transit and neighbourhood amenities can influence long-term occupancy.
• Existing and future supply — Investors should understand how many competing units are currently available and how many are scheduled for completion.
• Achievable rents — Development feasibility may depend on rents that are materially higher than those currently achieved by existing buildings.
• Unit mix — Studios, one-bedroom, two-bedroom and family-oriented units can perform differently depending on the market.
• Financing structure — Rental development can require significant capital before reaching stabilization, making financing terms and interest costs particularly important.
• Operating expenses — Property taxes, insurance, utilities, maintenance and management costs directly influence net operating income.

Development Versus Existing Rental Assets

Investors can access the rental sector through different strategies.

Development opportunities may offer greater potential value creation but also carry construction, financing, leasing and completion risks.

Existing stabilized apartment buildings provide operating history and current income but may be acquired at higher valuations.

Value-add strategies sit between the two. Acquiring an existing property and improving suites, amenities, operations or overall positioning over time.

Each approach creates a different risk and return profile.

The Investor Outlook

Purpose-built rental should increasingly be viewed as a market selection and execution story rather than simply a housing shortage story.

Canada continues to need housing. At the same time, investors must account for the large volume of rental supply currently being delivered.

The strongest opportunities may ultimately be those where developers can combine an attractive land basis, disciplined construction costs, appropriate financing and rents that remain affordable relative to the local market.

For investors, that makes detailed underwriting more important than ever. These conditions will not affect every rental market or development project equally. Local supply pipelines, land costs, achievable rents and financing conditions can produce significantly different outcomes even within the same province.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Canada is getting older.

As the baby boom generation moves further into retirement, the number of Canadians requiring different forms of seniors housing, supportive living and healthcare services is expected to increase substantially.

Statistics Canada estimated that more than 8.1 million Canadians were aged 65 or older in 2025, an increase of 3.4% in just one year. People aged 65 and older represented approximately 19.5% of Canada's population in 2025, and that proportion is projected to increase materially over the coming decades.

For commercial real estate investors, the trend is creating interest in an increasingly important property sector: seniors housing.

Seniors Housing Is Not One Asset Class

The term seniors housing can describe several different property and operating models. They may include:

• Independent living communities
• Retirement residences
• Assisted living
• Memory care facilities
• Continuing care communities
• Senior oriented apartments
• Long term care facilities

The amount of healthcare and personal support provided can vary significantly between them.

This distinction is important because seniors housing is often both real estate and an operating business.

Unlike a conventional apartment building where residents primarily rent space, a seniors residence may provide dining, housekeeping, recreation, transportation, personal assistance and healthcare related services.

The quality of the operator can therefore be just as important as the quality of the real estate.

Demographics Are Creating a Long Term Demand Driver

Real estate markets can move with economic cycles. Aging is considerably more predictable.

As Canada's population moves into older age groups, demand may increase not only for traditional retirement residences but for a continuum of housing options allowing residents to move between different levels of care.

This can create opportunities for communities that combine independent living, assisted living and additional care services within a single development.

The trend is already attracting investor attention. CBRE expects competition for Canadian seniors housing properties to intensify as investors seek exposure to the sector, while also noting that new supply remains constrained because current market rents do not always support the cost of developing new facilities.

That supply demand imbalance may become increasingly important as the population ages.

What Makes a Strong Seniors Housing Market?

Investors may consider more than population growth alone.

• Age demographics — critical, particularly the size and projected growth of the 75-plus and 85-plus populations.
• Household wealth and affordability — can influence whether residents can afford private pay retirement accommodation.
• Existing competition — helps indicate whether a market is underserved or already well supplied.
• Healthcare access — can be important for residents and their families.
• Proximity to family — many residents prefer to remain close to the communities in which they already live.

Smaller Ontario communities may sometimes present opportunities where demographic demand exists but institutional quality senior accommodation remains limited.

The Operating Component Matters

An attractive building does not automatically make an attractive seniors housing investment.

Occupancy, staffing, food costs, resident services, regulatory compliance, marketing and reputation can all materially affect operating performance.

Investors should therefore assess the operator's experience, historical occupancy, staffing practices and ability to manage resident care.

This creates a more operationally complex investment than many traditional property types.

Key Risks

Seniors housing carries risks that investors should carefully evaluate.

Development costs can make new projects difficult to finance. Labour shortages and wage increases can affect operating margins. Regulatory requirements can change. New properties can require significant time to achieve stabilized occupancy.

Affordability is another consideration. Demand for seniors accommodation does not automatically mean residents can afford every type of product.

The successful project must match the needs and financial capacity of its target population.

The Investor Outlook

Few Canadian real estate sectors have a demographic demand driver as visible as seniors housing.

That does not make every retirement residence or development opportunity attractive. But it does mean that investors are increasingly examining the sector as a long term component of Canada's housing infrastructure.

For investors capable of evaluating both the property and the operating business, seniors housing may represent one of the most important real estate themes created by Canada's changing demographics.

Demographic demand can provide a strong long-term foundation, but successful seniors housing investment ultimately depends on considerably more than population growth alone.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

A data centre can look relatively simple from the outside.

Inside, however, it represents some of the most sophisticated infrastructure in modern commercial real estate.

Data centres house servers and computing systems supporting cloud applications, artificial intelligence, financial services, telecommunications, streaming, e-commerce and the enormous volume of digital information generated every day.

As demand for computing power increases, the buildings that support it are becoming increasingly important.

JLL estimates that nearly 100 gigawatts of additional data-centre capacity could be added globally between 2026 and 2030, potentially doubling worldwide capacity. AI and hyperscale computing are among the major drivers.

This Is Not Traditional Industrial Real Estate

Although data centres are often physically located within industrial properties, their economics are very different from a typical warehouse.

A warehouse investor may begin with questions about ceiling height, loading doors, truck access and labour.

A data-centre investor may begin with a much more important question:

How much power can the site obtain?

Electricity availability has become one of the greatest constraints on data-centre development.

North American vacancy remained around 1% at the end of 2025, according to JLL, with a substantial portion of future capacity already committed. Nearly 60% of capacity in the development pipeline was leased, while much of the balance was planned for direct occupation by large hyperscale technology companies.

Why Power Is Becoming Real Estate

A development site may have hundreds of acres of land, appropriate zoning and highway access yet still be unsuitable for a major data centre if sufficient electricity cannot be delivered.

That means power capacity, transmission infrastructure and the timing of grid connections increasingly influence land value.

For large-scale facilities, investors and developers may evaluate:

• Power availability — How much electricity can actually be delivered to the property?
• Timing — Can that capacity be available within the required development schedule?
• Redundancy — Can the facility maintain operations if part of the power system fails?
• Fibre connectivity — Is the location connected to major telecommunications infrastructure?
• Cooling — How will heat generated by computing equipment be managed?
• Land and zoning — Can the property accommodate the buildings, substations, generators and security infrastructure required?

These considerations make data-centre development a combination of real estate, technology and infrastructure investing.

Why Canada Can Participate

Canada possesses several characteristics relevant to data-centre development, including major metropolitan technology markets, access to power infrastructure, substantial land in selected regions and a cooler climate than many southern markets.

But opportunities can be highly location-specific.

A site with confirmed power capacity may have substantially different development prospects than a nearby site without it.

Municipal planning, utility discussions and technical due diligence therefore become critical parts of evaluating potential projects.

The Economics Can Be Attractive, But Capital Intensive

Modern data centres can require extremely large amounts of capital.

In addition to land and shell construction, developers may need to fund substations, electrical systems, backup generation, cooling equipment, security and highly specialized building infrastructure.

Tenant credit can also matter considerably.

A long-term agreement with a major hyperscale or cloud provider creates a very different risk profile from constructing a speculative facility without committed users.

Investor Risks

Rapid growth does not eliminate risk.

Technology changes quickly. Equipment can become obsolete. Power costs can change. New forms of computing may alter building requirements. Construction costs can be significant, and delays in electrical connections can materially affect development schedules.

Data centres may also face greater scrutiny over energy consumption, water consumption and their impact on local electrical grids.

Investors therefore need to distinguish between enthusiasm surrounding AI and the actual economics of an individual project.

The Investor Outlook

Data centres illustrate how the definition of commercial real estate is expanding.

Investors are no longer evaluating only offices, apartments, shopping centres and warehouses. Increasingly, real estate provides the physical infrastructure supporting the digital economy.

In this sector, electricity, connectivity and infrastructure can be just as valuable as location and land.

That makes data centres one of the most interesting, and technically demanding areas of commercial real estate to watch.

The growth of AI and digital infrastructure may create substantial demand, but the economics of individual projects can vary dramatically depending on infrastructure availability and development execution.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Few Canadian property sectors experienced a stronger cycle than industrial real estate following the rapid growth of e-commerce and logistics.

Warehouses, distribution centres and last-mile facilities became highly sought-after. Vacancy fell dramatically in major markets, rental rates increased and industrial land values rose.

The market subsequently entered a period of normalization as new supply was delivered and tenant expansion slowed.

By 2026, however, signs of stabilization had begun to emerge.

CBRE reported that Canada's national industrial availability rate declined in Q2 2026 for the first time since 2022, reaching 5.5%, while national net absorption remained positive for a third consecutive quarter. New deliveries also slowed considerably.

Colliers similarly reported tightening industrial conditions nationally during Q2 2026.

Industrial Is More Than Warehousing

Industrial real estate serves a wide variety of businesses. Properties can support:

• Logistics and distribution
• Manufacturing
• Food production
• Cold storage
• Construction and building supplies
• Automotive uses
• Research and technology
• Data and digital infrastructure
• Last-mile delivery

Each use creates different requirements.

A distribution company may prioritize highway connectivity and clear height, while a manufacturer may care more about electrical capacity, zoning and heavy infrastructure.

This makes the underlying functionality of an industrial building particularly important.

Location Still Matters

Industrial tenants generally need to move goods, people or materials efficiently.

Properties near major highways, population centres, border crossings, airports and transportation infrastructure can therefore possess strategic advantages.

Within Ontario, access to Highway 401, Highway 400, Highway 407 and Highway 402 corridors can materially influence industrial location decisions.

But land costs within the GTA have also pushed developers and users toward secondary markets where larger sites may be available at lower costs.

This creates potential opportunities for municipalities capable of providing serviced employment land, sufficient power and good transportation connections.

The Industrial Market Is Becoming More Selective

The recent cycle demonstrated that industrial rents cannot rise indefinitely.

In the GTA, for example, CBRE reported positive absorption through Q2 2026 but noted that asking rents had declined for 11 consecutive quarters, although the rate of decline was moderating.

This is an important lesson for investors.

A strong property sector does not make every development financially viable.

Investors need to consider the relationship between land cost, construction cost, financing, achievable rents and expected value at stabilization.

What Investors Should Examine

• Transportation access — remains fundamental for logistics facilities.
• Power capacity — becoming increasingly relevant for advanced manufacturing, food production and technology uses.
• Clear height and loading — affect the efficiency of modern warehouses.
• Site coverage and outside storage — can materially affect certain industrial users.
• Zoning — can determine whether manufacturing, logistics, automotive, outdoor storage or other specialized activities are permitted.
• Tenant credit — influences the durability of income.
• Future supply — should also be monitored, particularly in submarkets where large speculative developments are planned.

Manufacturing May Become Increasingly Important

Industrial investment discussions often focus on warehouses, but manufacturing and strategic infrastructure are increasingly relevant.

Changes in global supply chains have encouraged companies and governments to consider domestic manufacturing, advanced technology and critical supply chain infrastructure more carefully.

For property investors, this can increase the importance of serviced industrial land capable of accommodating high power or specialized users.

The Investor Outlook

The next industrial cycle may look different from the last.

Instead of relying primarily on rapidly rising warehouse rents, investors may increasingly focus on location quality, infrastructure, power, tenant demand and replacement cost.

Industrial real estate remains one of the largest components of Canada's commercial property market.

But in a more balanced environment, disciplined property selection becomes increasingly important.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Not all retail real estate is performing the same way.

Traditional shopping malls, neighbourhood plazas, grocery-anchored centres, luxury retail and mixed-use urban properties can exhibit very different fundamentals.

That distinction has become increasingly apparent in Canada.

JLL reported that Canadian mall vacancy increased to approximately 7.5% during 2025, while vacancy in neighbourhood and strip shopping centres remained below 2%.

The difference provides an important lesson for investors:

Retail is not one market.

Necessity and Convenience Matter

Consumers may purchase electronics or clothing online, but many activities remain difficult to digitize.

People continue to visit grocery stores, pharmacies, restaurants, medical clinics, fitness centres, daycare facilities, personal-service businesses and other neighbourhood services.

This has helped support demand for well-located community and neighbourhood shopping centres.

Many of these properties also benefit from something that new development increasingly struggles to reproduce: good locations surrounded by established residential communities.

As urban areas become denser, well-located commercial land can become increasingly difficult and expensive to replace.

The Tenant Mix Has Changed

The strongest retail properties today may look quite different from those of 20 years ago.

A traditional centre might once have relied heavily on apparel and merchandise.

Modern neighbourhood centres increasingly combine retail with services.

A property could include a grocery store, pharmacy, restaurant, dentist, physiotherapist, veterinarian, daycare, fitness studio and financial-services tenant.

This creates a location that serves everyday community needs rather than relying entirely on discretionary shopping.

Why Investors Like Grocery Anchored Retail

Grocery stores can generate frequent customer visits and help attract complementary tenants.

For an investor, a strong anchor may provide predictable rental income while supporting traffic throughout the centre.

However, the name of the anchor alone does not determine the quality of the investment.

Investors should also review the lease term, renewal options, rental rates, tenant covenant, operating obligations and the amount of capital required by the property.

A long lease at a materially below market rent may create a different opportunity than a long lease at an above market rent.

What Investors Should Evaluate

• Trade area — How many people live or work nearby?
• Visibility and access — Can customers easily see and enter the property?
• Parking — Is there enough convenient parking for the tenant mix?
• Tenant quality — Are the occupants financially strong and appropriate for the location?
• Lease expiry schedule — Do many tenants expire at the same time?
• Market rents — Are existing rents above or below current market levels?
• Vacancy and leasing costs — How easily could vacant space be re-leased?
• Redevelopment potential — Could excess land support additional density or mixed-use development in the future?

Retail Can Also Be a Land Play

Many older Canadian shopping centres occupy relatively large parcels in established urban areas.

Over time, the land may become more valuable for residential or mixed-use intensification.

This creates an interesting investment model: investors may receive income from the existing retail centre while pursuing longer term redevelopment potential.

That does not mean redevelopment is guaranteed. Municipal approvals, construction costs, tenant leases and servicing can create significant complexity.

But it demonstrates why some retail properties should be evaluated as both income producing assets and strategic land holdings.

The Investor Outlook

The story of Canadian retail is increasingly one of separation.

Properties dependent on outdated formats may struggle, while necessity oriented, grocery anchored and well-located neighbourhood centres can display considerably stronger fundamentals.

Retail has not disappeared. It has evolved.

For investors, understanding which retail people continue to need, and which locations are difficult to reproduce, may be more important than broad predictions about the future of shopping.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Few commercial property sectors experienced as dramatic a disruption as office real estate.

Hybrid work led many companies to reduce space, vacancy increased and investors questioned the long-term value of office buildings.

But Canada's office market is now beginning to show evidence of recovery.

CBRE reported that national office demand remained positive for a fourth consecutive quarter in Q2 2026, the first time this had occurred in more than six years. Seven of 11 tracked Canadian markets recorded positive absorption, led by Toronto, Calgary and Montreal.

Yet the recovery is far from equal.

The Flight to Quality

One of the strongest trends has been tenant preference for higher quality buildings.

Companies seeking to encourage employees back into the office increasingly value modern buildings with good amenities, transit access, attractive common areas and efficient floorplates.

This has supported demand for trophy and Class A properties.

CBRE reported that downtown Class A vacancy declined in nine of 11 Canadian markets during Q2 2026. In downtown Toronto, vacancy among the highest-quality trophy buildings was just 2.6%.

That creates an increasingly divided market.

Two office buildings located only blocks apart may have dramatically different leasing prospects depending on age, quality, transit access, amenities and capital requirements.

Very Little New Office Is Being Built

One of the most significant developments may be the collapse in new construction.

Canada's office construction pipeline declined to approximately 1.2 million square feet in Q2 2026, which CBRE described as a two decade historic low. There are few major deliveries expected beyond 2027.

If office demand continues improving while little new space enters the market, the balance between supply and demand could gradually tighten.

This does not mean every office building will recover equally.

It does mean high quality existing buildings may face considerably less new competition.

What Happens to Older Office Buildings?

This is one of the most interesting questions facing investors.

Some older properties can be renovated. Others may be repositioned for different tenants. Some may eventually be converted to residential, hotel, educational or other uses. Others may simply become economically obsolete.

Since 2021, CBRE estimates that approximately 9.1 million square feet of Canadian office space has been removed through conversions, with another 3 million square feet demolished. Together, these actions have reduced national inventory by approximately 2.6%.

Office Conversion Is Not Easy

Turning an office building into apartments may sound straightforward but can be extremely challenging.

Deep floorplates may prevent natural light from reaching residential units. Plumbing systems may require substantial changes. Parking layouts, ceiling heights, structural systems and zoning can create additional problems.

The cost of purchasing the building therefore matters enormously.

A conversion that is impossible at one acquisition price may become viable at a sufficiently lower basis.

What Investors Should Evaluate

Office investors increasingly need to examine the asset at a building by building level. Important considerations include:

• Location and transit
• Building quality and amenities
• Tenant credit and remaining lease term
• Capital expenditures required to remain competitive
• Current vacancy and competing space
• Potential alternative uses
• Replacement cost versus acquisition cost
• Financing availability

The Investor Outlook

The Canadian office sector should no longer be viewed simply through the question: "Will employees return to the office?"

The more relevant investor question may be:

Which offices will companies want to occupy?

As tenants concentrate in better buildings, higher-quality assets may recover while weaker properties require substantial repositioning, or an entirely new use.

That disruption can create risk.

But for disciplined investors, periods of disruption can also create opportunities to acquire assets at bases that would have been difficult to achieve during stronger market cycles.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Not all commercial real estate investments are designed to produce returns in the same way.

Two common strategies are income producing real estate and development oriented real estate. Both involve real property, but their cash flow profiles, business plans, timelines and risks can be very different.

Understanding those differences can help investors determine what questions to ask when evaluating an opportunity.

What Is Income Producing Real Estate?

Income real estate generally refers to an existing property generating rental revenue from tenants. Examples can include:

• Retail plazas
• Industrial buildings
• Multifamily properties
• Office properties
• Mixed-use buildings

The investment often focuses on acquiring or owning a property where existing or future rental income supports the investment.

How Can an Income Investment Generate Returns?

Potential returns may come from:

Property Cash Flow

Rental income remaining after operating expenses, financing and other applicable costs may support investor distributions.

Income Growth

Rental revenue may potentially increase through contractual rent increases, lease renewals or improved occupancy.

Property Appreciation

If the property's income or market value increases, investors may potentially benefit when the property is refinanced or sold.

What Is Development Real Estate?

Development investments focus on creating or substantially repositioning real estate. A simplified development process might look like:

Land Acquisition → Planning & Entitlements → Financing → Construction → Leasing / Sales → Stabilization → Exit

Value is created by successfully moving the property through these stages.

Development Can Have a Different Cash Flow Profile

Unlike an existing income property, development projects may produce little or no operating cash flow during the early stages. Investor capital may instead be used for:

• Land acquisition
• Professional consultants
• Planning
• Development approvals
• Construction
• Financing costs
• Project expenses

Returns may be realized later through a sale, refinancing or stabilization of the completed development.

Comparing the Two Strategies

Is One Strategy Better?

Not necessarily.

The appropriate strategy depends on an investor's objectives, risk tolerance, investment horizon and portfolio.

An investor seeking current cash flow may evaluate an income producing property differently from an investor prepared to accept a longer investment period in pursuit of development related value creation. Some portfolios may include both.

The Importance of the Sponsor

Sponsor capability is important for either strategy, but the required experience can differ.

Operating a stabilized shopping centre requires expertise in leasing, tenant relationships and property management. Developing a major project requires expertise in planning, construction, financing and project execution.

Investors should therefore evaluate whether the sponsor's experience aligns with the specific strategy.

Questions to Ask

For an income investment:

• How stable is the existing NOI?
• Who are the tenants?
• When do leases expire?
• How much debt is being used?
• What supports future income growth?

For a development investment:

• What approvals remain outstanding?
• What is the development budget?
• How will construction be financed?
• What happens if the project is delayed?
• What is the planned exit?

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This material is provided for general educational purposes only and does not constitute investment, legal, tax or financial advice. All private real estate investments involve risk, including possible loss of capital.

Commercial real estate has traditionally been divided into a few major categories: office, retail, industrial and multifamily.

Today, institutional investors are increasingly allocating capital to property types that sit outside those traditional classifications.

Colliers' 2026 Global Investor Outlook identified student housing, self-storage and healthcare properties among the alternative sectors attracting increased investor interest.

These investments can provide exposure to economic and demographic drivers that differ from conventional commercial properties.

But specialized real estate often requires specialized knowledge.

Student Housing

Purpose built student accommodation serves a very specific population and can experience strong demand in university and college communities where conventional rental housing is limited.

Properties may provide furnished units, shared amenities, study areas, internet and other services designed around student lifestyles.

The investment thesis can be attractive because major educational institutions create recurring demand.

However, Canadian student housing requires particularly careful analysis today.

Changes in international student policies and enrollment patterns can materially affect certain markets. Statistics Canada has found that Ontario historically received a disproportionate share of Canada's international students, approximately 60% in the 2023/24 academic year, making changing student flows particularly relevant to Ontario housing markets.

Investors should therefore examine total enrollment, domestic versus international students, university housing capacity, competing rentals and future policy changes rather than relying solely on historical demand.

Self-Storage

Self-storage represents a very different form of real estate.

Customers rent relatively small spaces to store household goods, business inventory or personal belongings.

Demand can be influenced by moving, downsizing, divorce, renovation, business activity and smaller residential living spaces.

Unlike traditional commercial properties where a single tenant might occupy 50,000 square feet, a storage property may have hundreds or thousands of individual customers.

This diversification can reduce dependence on any single tenant.

Technology is also changing the sector. Automated access systems, digital leasing and remote property management can reduce staffing requirements and allow operators to manage facilities more efficiently.

CBRE has noted that Canada's self-storage market remains comparatively young and continues to face development constraints in some municipalities because of zoning and planning restrictions.

Healthcare Real Estate

Canada's aging population also creates demand for medical offices, clinics, rehabilitation facilities and other healthcare-related properties.

Healthcare buildings can benefit from tenants that invest heavily in their premises and may be less inclined to relocate frequently.

But investors need to understand the healthcare operating environment.

A medical building leased to numerous established practitioners creates a very different risk profile from a specialized facility dependent on one operator.

Location near hospitals, population demographics, parking, accessibility and appropriate building infrastructure can all affect performance.

Why Alternative Assets Attract Investors

One potential advantage is diversification.

Traditional property sectors often respond differently to economic conditions.

An office building may depend heavily on corporate employment. A student residence depends on enrollment. A self-storage facility depends partly on household movement and density. A healthcare property may be influenced by population age and healthcare demand.

Combining assets exposed to different demand drivers can potentially create a more diversified real estate portfolio.

The Trade-Off: Specialization

Alternative does not automatically mean lower risk.

These properties can be harder to operate and value because there may be fewer comparable transactions.

Financing may be more specialized.

The pool of potential purchasers can also be smaller.

And in many alternative sectors, operator quality is critical.

An investor in self-storage, seniors housing or student housing is often evaluating not simply the property but the platform operating it.

What Investors Should Consider

Before entering a specialized real estate sector, investors may want to ask:

• What actually creates demand for this property?
• Is that demand temporary or structural?
• How experienced is the operator?
• How difficult would the property be to replace?
• How deep is the potential buyer market when it is time to sell?
• Does the building have alternative uses if the current strategy changes?

These questions can help identify the difference between an attractive specialized investment and an asset whose value depends too heavily on a narrow operating model.

The Investor Outlook

Commercial real estate continues to evolve.

The investable universe now extends well beyond offices, warehouses and shopping centres.

Student housing, self-storage, healthcare, seniors housing and digital infrastructure demonstrate how changing demographics, technology and consumer behaviour can create entirely new real estate strategies.

For investors, these sectors may provide compelling diversification, but they also reinforce a fundamental principle of private real estate:

Understanding the underlying demand driver is more important than the label placed on the asset class.

Market information is current as of August 2026 and may change. This material is provided for general informational and educational purposes only and does not constitute investment, legal, tax or financial advice. Forecasts and forward-looking statements are inherently uncertain.

Commercial real estate has historically been one of the world's largest private asset classes, yet accessing private real estate investments has traditionally involved a highly manual process.

Investor introductions, subscription documents, identity verification, reporting, distributions and ownership records have often been handled across multiple systems.

Digital private market platforms are beginning to change that experience.

The Traditional Private Real Estate Model

Historically, private real estate capital raising has often relied on relationships:

1. A sponsor identifies an opportunity
2. Investors are introduced to the investment
3. Offering materials are distributed
4. Investors complete subscription documents
5. Capital is transferred
6. Ownership records are maintained
7. Investors receive periodic reporting and distributions

The investment itself may be sophisticated, while the administrative process surrounding it can remain fragmented.

The Rise of Digital Private Markets

Technology can bring more of this process into a centralized environment. A digital private markets platform can potentially support:

• Investor onboarding
• Identity and eligibility verification
• Investment discovery
• Secure document access
• Electronic subscriptions
• Ownership administration
• Portfolio reporting
• Distribution records
• Investment updates

This can create a more organized experience for both investors and sponsors.

From Individual Deals to a Marketplace

Another important evolution is the ability to bring multiple private investment opportunities together within a single platform.

Instead of maintaining separate relationships, portals and documentation for every investment, eligible investors may be able to access multiple sponsors, funds and investment strategies through one digital environment.

This creates the foundation for a private real estate marketplace.

The Role of Tokenization

Tokenization can add another layer to digital private markets.

An investor's security or interest in an investment vehicle may potentially be digitally represented using blockchain or other digital infrastructure. This does not eliminate the underlying legal structure.

A simplified model is:

Real Estate → Legal Investment Vehicle → Investor Security → Digital Representation

The legal agreements, investor rights and applicable securities requirements remain fundamental.

What Could Tokenization Improve?

Potential applications include:

Ownership Administration

Digital records may help streamline the administration of investor interests.

Reporting

Investors can potentially access ownership and investment information through a centralized digital portal.

Transactions

Digital infrastructure may help make certain administrative processes more efficient.

Transfers

Where legally and contractually permitted, technology may eventually support more efficient transfers between eligible investors.

Does This Create Instant Liquidity?

No.

Digitizing a private investment does not automatically create a liquid market. A private security may remain subject to:

• Securities laws
• Investor eligibility requirements
• Contractual restrictions
• Holding periods
• Sponsor approvals
• Market demand

Technology may improve the infrastructure around a permitted transfer, but it cannot guarantee that a buyer exists.

Greater Access Requires Strong Compliance

Digital access should not mean unrestricted access.

Private investments may only be appropriate or legally available to certain categories of investors.

As private markets become more digital, technology can also support investor qualification, KYC/AML procedures, documentation and jurisdiction based access.

The objective should be to make private markets more efficient without removing the protections surrounding them.

What This Means for Real Estate Sponsors

Digital private markets can also change capital formation for real estate owners and developers. A sponsor may eventually be able to:

1. Present an opportunity
2. Provide a digital data room
3. Connect with eligible investors
4. Complete subscriptions
5. Manage investor reporting
6. Administer the investment digitally

This can create a more scalable relationship between sponsors and private investors.

Real Property. Real Investments. Digital Infrastructure.

This material is provided for educational purposes only. References to digital securities, tokenization or secondary transfers should not be interpreted as representing that any particular investment is freely transferable or liquid.