CRE Investment Conditions & Capital Markets Perspective
- Despite a higher long-term interest rate environment, Canadian commercial real estate investment activity remained resilient through the first three quarters of 2026. Total transaction volume reached $40.4 billion, up 4% year-over-year from the same period in 2025. Multifamily led all asset classes with $11.5 billion in investment volume, while industrial investment remained stable at $9.5 billion, broadly in line with the levels recorded in 2024 and 2025.
- Investors have become increasingly selective as bond yields moved higher throughout the quarter. The report notes that rising interest rates have sharpened investor focus on assets with the clearest ability to maintain and grow NOI while minimizing capital expenditure requirements. Trophy-quality properties across asset classes continue to benefit from limited new supply, declining development activity, and sustained tenant preference for higher-quality space.
- Property fundamentals remained constructive across several major sectors. Multifamily continued to attract the highest level of investment activity nationally, industrial fundamentals remained stable with a 5.4% national vacancy rate and 48.8 million square feet of leasing activity through Q3, while office investment volume increased to $4.6 billion year-to-date, supported by improving absorption and continued demand for Class A and trophy office assets. Retail investment volumes moderated during the quarter, though rolling annual activity remained stable and private investors continued to dominate acquisitions.
- Across asset classes, market activity increasingly reflects a preference for quality and long-term income durability. The report highlights that the strongest-performing properties are those benefiting from sustained occupier demand driven by factors such as superior building quality, favourable demographics, and AI-oriented uses. These trends continue to support investor interest in high-quality multifamily, industrial, office, retail, seniors housing and hospitality assets despite ongoing volatility in capital markets and interest rates.
Check out our Q3 2026 Canadian Cap Rate & Capital Markets Report for more insights across key Canadian property sectors.
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