Understanding shifting demand in Canadian commercial real estate market

The Canadian commercial real estate market is undergoing significant changes due to factors such as population growth, a housing crisis, and the necessity for increased density. The RE/MAX Canada 2024 Commercial Real Estate Report provides a comprehensive overview of these shifts, examining trends across 12 markets.

I Stock 2149033680


Population Growth and Housing Shortage

Canada's population reached 40.8 million by January 2024, with over 1.2 million net international migrations in 2023. This surge has exacerbated the existing housing shortage, prompting builders and developers to focus on multi-family construction and purpose-built rentals.

The Canada Mortgage and Housing Corporation (CMHC) has incentivized this shift with programs offering low-interest rates, favourable terms, and 50-year amortization periods, creating a conducive environment for residential construction even in a high-interest rate scenario.

Multi-family Construction

Purpose-built rentals dominate the construction landscape in major urban centers. This trend is driven by the federal government's removal of GST on new residential builds and the CMHC's Apartment Loan Program.

Markets like Vancouver, Calgary, Regina, Winnipeg, London, Ottawa, and Halifax have particularly low vacancy rates (below 1.8 per cent), indicating high demand for rental housing.

High-density and Mixed-use Development

Limited land availability and continued population growth in urban areas have led many mall and shopping center landlords to integrate residential components, creating mixed-use developments.

This approach is not only a response to the housing crisis but also a strategic move to increase property value and utility.

Capital Gains Tax Impact

Smaller investors are feeling the strain of an increased capital gains tax inclusion rate from 50 per cent to just over 66 per cent, as announced in the 2024 Budget. This has led some to pull back on selling properties, affecting market dynamics.

Industrial Real Estate

Industrial real estate remains in high demand, with tight inventory in markets like Hamilton, Halton to Niagara, Newfoundland and Labrador, and Halifax. Despite increased availability due to new space, demand continues to outpace supply.

Businesses are considering properties on city outskirts for affordability and in areas like Vancouver, where industrial land is scarce, looking to Alberta or the US for alternatives.

Bricks and Mortar Retail

Traditional retail spaces still hold appeal, particularly in neighbourhood settings where service-related businesses (health and wellness, medical offices) are thriving.

Malls are evolving to better tenant mixes and incorporating new uses such as daycare facilities to adapt to changing demographics and needs.

Luxury Retail Brands

High-end brands are expanding in major markets like Toronto's Yorkville, the Bloor Street 'Mink Mile,' and Vancouver's Alberni Corridor, maintaining robust demand for premium retail space.


Farmland, especially in Saskatchewan, is performing exceptionally well due to record commodity prices and large-scale purchases by farming corporations. The FCC Farmland Values Report noted a 15.7 per cent increase in price per acre in 2023, with even higher gains in certain regions.

Hospitality Industry

The hospitality sector has rebounded strongly, with significant growth in room rates and new hotel developments, particularly in Halifax. This resurgence is attracting interprovincial investors to hotel properties.

Real Estate Investment Trusts (REITs)

REITs are adjusting their portfolios, leading to divestments of older assets and acquisitions of newer properties, particularly in office and retail segments.

Adaptive Reuse

Adaptive reuse of commercial buildings is gaining traction, with cities like Calgary, Winnipeg, and Halifax leading in converting office spaces to residential uses. This trend addresses both office space surplus and housing shortages.

Vendor Take-back Financing

Elevated interest rates have impacted land development, but vendor take-back financing is helping close deals, particularly in markets like the Greater Toronto Area and Halifax.

I Stock 1400807493


Greater Vancouver Area

The market is recovering slowly from a soft 2023, with an emphasis on purpose-built rentals supported by CMHC incentives. Industrial properties are scarce, leading businesses to look to Alberta and the US for space. Mixed-use developments in malls are becoming more common.


Calgary's population growth has driven demand for housing, leading to a focus on multi-family rentals and office-to-residential conversions. Industrial properties remain in demand, with balanced conditions emerging due to new inventory.


Edmonton's strong economic performance is underpinned by immigration and interprovincial migration, driving demand for multi-family and industrial properties. Retail and office segments are also growing, with a notable increase in foot traffic downtown.


Regina is experiencing robust commercial activity with a focus on industrial properties and multi-family rentals. Economic expansion and population growth are key drivers, with significant investments in infrastructure and housing.


Saskatoon's commercial market is vibrant, with strong demand for multi-family, industrial, and retail properties. Farmland remains highly sought after, with values increasing significantly due to corporate purchases.


The industrial and multi-family segments are thriving in Winnipeg, with significant redevelopment projects aimed at revitalizing the downtown core. Retail remains strong, with limited new construction bolstering demand for existing properties.


London's commercial market is stable, with strong demand for industrial and multi-family properties. Office vacancies are high, leading to potential residential conversions. Institutional investors are active, driven by the city's growing population.

Hamilton (Halton to Niagara)

Multi-family and industrial properties dominate the market, with robust demand driven by population growth. Retail is shifting from urban to suburban areas, with mixed-use developments in malls becoming more prevalent.

Greater Toronto Area

The GTA market is characterized by strong demand for multi-family and industrial properties. Retail plazas with residential potential are highly sought after. Office vacancies remain a challenge, but new mixed-use projects are underway.


Ottawa's industrial properties are in high demand, with a significant shift towards residential conversions of office spaces. The retail sector remains robust, and suburban office markets are flourishing.

Halifax Regional Municipality

Halifax is experiencing significant population growth, driving demand for industrial and multi-family properties. Retail and hospitality sectors are thriving, with new developments and expansions underway.

Newfoundland and Labrador

Economic optimism in Newfoundland and Labrador is boosting demand for commercial properties, particularly industrial and multi-family segments. Significant investments in energy and mining are driving economic growth.

Overall, the Canadian commercial real estate market is adapting to changing demographics and economic conditions, with a strong focus on multi-family and industrial properties, mixed-use developments, and innovative solutions to increase density and meet housing and service demands.

Share on LinkedInShare on TwitterSend to a friendCopy Link