Analyzing commercial cap rates and sales volumes across Canada
Real Estate Investment Conditions and Trends
- Interest rates remain volatile, with the Canadian (CDN) 10Y and United States (U.S.) 10YT fluctuating significantly. Despite daily movements, our base case is that the CDN 10Y and the U.S. 10YT will generally hover in the 3.25% and 4-4.5% range respectively, consistent with long-run equilibrium.
- The capital markets recovery is underway, with volumes climbing and participation broadening. The path forward is shaped by higher-for-longer interest rates and marginally neutral-to-positive leverage conditions, suggesting a gradual improvement rather than a rapid rebound ahead.
- Industrial net absorption gained momentum in the latter half of 2025, totaling 7.9 million square feet (msf) over the final two quarters of 2025, a sharp rebound from the negative 1.1 msf recorded in the first six months of the year.
- Retail demand has remained resilient but rising costs may impact specific categories.
- Office vacancy steadily declined throughout 2025 and in Q4 2025 reached 16.2% nationally – its lowest level since Q2 2023.
- Multifamily faces headwinds. However, home ownership affordability is at all-time lows, which will provide support for apartment demand.
- Hospitality had seen record pricing based on strong investor demand and limited availability of quality investment product. The sector continues to attract investment capital for both existing assets and new development.
- Seniors housing is positioned for robust growth, fueled by favourable demographics, a slowdown in supply growth and improving operating fundamentals.
Check out our Q4 2025 Cap Rates & Capital Markets Report to learn more.
Asset types include:
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