“There are better days ahead. I’m so bullish on Canada.”
“I feel a sense of optimism that I haven’t in a while.”
Optimism, this year, is earned.
Real estate executives across Canada are calling it: the market is at, or very near, the bottom. They point to signs including resetting valuations and a deal cycle turning a corner. Investors are also growing more optimistic about the buying opportunities ahead. Canadian respondents to this year’s Emerging Trends in Real Estate® survey provided an aggregate buy rating of 3.61—the highest in 15 years. Sentiment toward selling, meanwhile, remains near record lows but has started to pick up.
Confidence in the recovery is building. But optimism won’t convert into opportunity on its own. That conversion will be earned by the organizations disciplined enough to solve the constraints standing between them and the opportunities the next cycle creates.
Trade disputes, escalating operating costs, and compressed yields are part of why this year’s optimism comes with a qualifier. But they aren’t what will determine who seizes the opportunities ahead. That will come down to capability: how deliberately an organization positions its assets, plays to the distinct strengths of regions across the country, and accelerates its own operations to capture what the next cycle offers.
Canada isn’t experiencing one cycle. It’s experiencing several. Ask about Canada’s real estate outlook, and the answer depends on the asset class—senior housing, retail, and industrial are pulling ahead, while the condo market is still absorbing an inventory overhang. Ask by region, and the picture splits again—downtown Toronto’s trophy office towers are rebounding on return-to-office mandates, while Ottawa wrestles with a shrinking federal footprint, for example.
Ask by role in the value chain, and confidence splits yet again: this year’s Emerging Trends survey shows real estate investors and services firms growing more optimistic heading into 2027, while lenders, investment managers, and developers pull back. And ask about the impact of artificial intelligence (AI), and another divide appears: legacy systems are slowing some, while an appetite for experimentation is driving others forward.
Yet beneath every asset class, city, and business model, the same question shapes the outlook: is the organization still doing business the way it did a decade ago, or is it reinventing itself for what comes next?
The outlook for purpose-built rental is an example of optimism with conditions attached. Policy support exists in the form of Canada Mortgage and Housing Corporation (CMHC) financing, municipal incentives, and development charge relief, but it hasn’t settled the debate over whether now is the time to build. A wave of new supply is hitting the market as immigration slows, pushing up vacancy rates and complicating the math underpinning new builds. This is keeping some developers on the sidelines. Yet others, particularly those backed by long-term capital, are moving forward, expecting the market to absorb recently constructed units and for immigration levels to accelerate in the coming years. The divide comes down to timing—whether to move now or wait for a better entry point. These decisions will shape how much new housing gets built, and with it, housing affordability for the Canadian population in the coming decade.
Retail tells a different story. Not long ago, many believed e-commerce would hollow out bricks-and-mortar storefronts. Instead, an undersupply and a rebound in tenant demand have broadened investor interest beyond necessity-based and grocery-anchored properties. One interviewee said traditional malls are adapting and now outperforming pre-pandemic levels. Taken together, the evidence points to something bigger than a rebound: a retail supercycle. That popularity is drawing in capital fast enough to worry some investors who fear it will drive down the returns that made retail attractive in the first place. Others question how much room is actually left to grow, given how far rents have already been pushed across most of the sector.
This retail debate reflects larger questions running throughout this year’s report: where are opportunities concentrating? And who is positioned to reach them? Understanding the impact of technological disruption, geopolitical tensions, changing demographics, and other megatrends provides part of the answer.
For example, data centre demand is surging, and electricity access increasingly decides who gets to build. This is where power, compute, and real estate now meet. Defence spending is expected to spur new industrial and residential demand, connecting national resilience with real estate. Changes in how we care for ourselves are reshaping real estate too: an aging population, reimagined medical-office formats, and community-centred designs are converging around an opportunity that reaches well beyond senior housing alone.
Acting on these trends takes capital. While debt capital remains plentiful, lenders have grown fiercely selective—favouring strong sponsors, income-producing assets, and highly bankable projects. Ahead of an impending 2027 refinancing wave, equity—not debt—has emerged as the defining constraint for borrowers looking to recapitalize and move forward. That pressure is elevating the importance of tax-aware capital, where policy reforms offer a practical lever to attract foreign investment into Canada. Turning capital into performance, however, demands new capabilities. Companies are moving from AI experimentation to measurable results, creating and capturing value in ways that go beyond efficiency and help unlock operating alpha.
Each shift carries its own binding constraint. Solving them is what can turn today’s optimism into tomorrow’s opportunity.
