Markets to Watch

Calgary will continue to have one of the strongest economies in the country despite economic and demographic headwinds that will slow the city’s growth over the next several years, according to the Conference Board of Canada (CBoC). Although Calgary's economy has become more diversified, it’s still dependent on oil prices, which are weak. Calgary has also benefited from strong population growth, which reached 5.8 percent in 2023/2024, making it the fastest growing city in Canada, according to Statistics Canada. However, this population growth is expected to slow.

Still, the city’s real gross domestic product (GDP) growth is expected to accelerate from 1.8 percent in 2025 to 2.6 percent in 2026, which would make it Canada's top-performing city, according to CBoC forecasts. “Calgary continues to be a great market,” said one interviewee. This reflects the broader sentiment of survey respondents, who once again ranked Calgary as the top market to watch in Canada. Although they’re wary of the cyclical nature of Calgary’s economy, respondents said more capital is moving west.

New home construction in Calgary reached a record high in 2024 for the third year in a row, according to CMHC. The level of new home construction is expected to remain elevated due to supportive policy and market conditions, although developers may become more cautious given the substantial increase in supply and expected slowdown in population growth. 

Purpose-built rental stock increased by an unprecedented 10 percent in 2024, which caused the vacancy rate to jump from 1.4 percent in 2023 to 4.8 percent in 2024, according to CMHC. While the vacancy rate is forecast to rise to 5.8 percent in 2025, it’s expected to decline from there through 2027 as the city’s rental stock keeps increasing.  

Some interviewees reported that developing purpose-built rental is becoming more challenging because tighter guidelines make it more difficult to get CMHC funding. As a result, some market participants are looking to acquire existing assets and improve their operating model to reduce costs. For instance, some large players are looking at using AI in their call centres.

Calgary’s retail market is showing resilience, particularly in suburban and mixed-use developments that benefit from population growth and new housing. Grocery-anchored and essential service retail remain strong, while some regional mall owners are looking at repositioning or redeveloping space to adapt to changing consumer preferences. Retail vacancy rates declined in the first half of 2025, according to CBRE, and new retail space is often integrated into large residential and mixed-use projects.

The suburban office market in Calgary continues to substantially outperform the downtown market. However, in the second quarter of 2025, the suburban office market experienced negative absorption for the first time since the first quarter of 2023, according to CBRE, and it’s susceptible to the slowdown in population growth. At the same time, the first two quarters of 2025 marked the first time since the first quarter of 2016 that the suburban office market experienced a vacancy rate below 20.0 percent for two consecutive quarters, according to CBRE. 

As of the second quarter of 2025, the suburban office market vacancy rate of 19.5 percent was well below the downtown rate of 30.7 percent. The downtown market has been hurt by downsizing in the technology sector and consolidation in the energy industry. Oil price volatility and economic uncertainty may continue to put pressure on the downtown office market.  

Calgary has expanded its program to convert underused office space into housing or hotels, and 21 properties are now part of the program. Interviewees highlighted Calgary as a good example of government supporting the creative reuse of existing assets through permitting and funding, and they saw this asset repositioning as a promising growth prospect.

Although the vacancy rate for Calgary’s industrial market has risen over the past couple of years, standing at 4.1 percent in the second quarter of 2025, according to Colliers, the market still offers opportunities for investment and growth. With growing economic uncertainty and high construction costs, the focus is on mid-size spaces as opposed to large industrial properties. Many developers are moving away from speculative building to concentrate on purpose-built projects. 

The market may get an additional boost over the next five years from the Prairie Economic Gateway—an inland port and industrial park the City of Calgary says will serve as an industrial, manufacturing, and logistics hub. This project is currently in the land-use approvals stage, with commercial readiness expected sometime between 2027 and 2030.

There is also growing interest in data centres in Alberta, but limited tangible outcomes apart from several power procurement agreements. 

Housing affordability in Toronto has improved, but not enough to make a difference for many buyers, according to the Royal Bank of Canada (RBC), citing its aggregate housing affordability measure (calculated as homeownership costs as a percentage of median household income). This, along with high consumer debt levels, mortgage rates that have been slow to fall, weak confidence, and elevated economic and policy uncertainty, is straining demand for residential real estate.

Despite these headwinds, interviewees remain confident in Toronto’s long-term fundamentals, naming it the top market for homebuilding prospects for the second straight year. But this optimism doesn’t extend to all housing segments.

The condo market is dead according to many interviewees, although there are faint heartbeats in the low-rise, ground-oriented market. The effects of new immigration policies remain to be seen. For the moment, interviewees said the impact is most evident in the student housing market, where the vacancy rate, although low, is increasing.

A weak condominium market and a slight decline in detached housing starts are expected to result in a decline in total housing starts in 2025, although purpose-built rental apartment starts are expected to increase, according to CMHC. At the same time, new CMHC rules announced in September 2024 increased the price cap for insured mortgages, expanded eligibility for 30-year mortgages, and removed the need for new stress tests when refinancing with a new lender. CMHC forecasts these new mortgage rules and falling mortgage rates will drive a modest increase in detached home starts in 2026 and 2027. 

Institutional investors are playing a larger role in Toronto’s condominium landscape, which has traditionally been characterized by large numbers of individual investors. Some see this as a positive shift because institutions can bring more sophisticated property management skills and services to managing a portfolio. At the same time, some developers are rethinking their residential products and trying to broaden the appeal beyond investors by offering larger, higher-quality units.

Canadian institutional investors and family offices are assuming new roles in the current real estate downturn. They’re acquiring distressed assets and unsold developer inventory at deep discounts, providing alternative financing, and assembling land parcels in preparation for future growth opportunities. Major transit infrastructure investments, including the Eglinton Crosstown, Ontario Line, and GO Expansion rail projects are spurring demand for transit-oriented development and shaping land values and development patterns across the Greater Toronto Area (GTA).

In this environment, developers—incentivized by government policy—are cautiously turning to purpose-built rental, even though higher completions are expected to increase vacancy rates and drive rental rate growth below the 10-year average through 2026, according to CMHC. Already, current rental rates are making many projects unviable, so developers are entering joint ventures with nonprofits and including affordable housing components to increase access to government incentives. They’re also exploring possibilities in alternative and operating assets, with some showing interest in hotels.

Cautious optimism is creeping into the top tiers of the downtown office market. Leasing velocity has picked up in higher-class properties in the first half of 2025 as more companies, including most of the major banks, mandate a return to the office and some firms that previously scaled back their footprints look to add space. Net rents hit a seven-quarter high in early 2025, although they eased off slightly in the second quarter of 2025, according to CBRE. 

The overall vacancy rate for the downtown Toronto office market was 18.1 percent in the second quarter, CBRE reported, but tenants continue to have a strong preference for space in trophy assets. This helped keep vacancy rates for this asset class at a relatively low 4.4 percent and its net rents outperformed the rest of the market. Similarly, while downtown saw a total net negative absorption, AAA assets experienced positive absorption in the second quarter, according to CBRE. The completion of a substantially pre-leased 50-storey trophy asset later this year is expected to continue this trend.

Investors are once again considering high-quality offices within the core. Some believe dislocation in the market over the past couple of years has created select opportunities at a time when they also believe the market has bottomed out and cap rates are attractive on a risk-adjusted basis. With current leasing trends putting pressure on available high-quality space, some interviewees speculated discussions about potential new construction could intensify in the coming years.

The peak of the GTA’s industrial market appears to have passed, but there’s still some optimism, as evidenced by continued, albeit slower, speculative building. The availability rate reached a 13-year high in the second quarter of 2025 and rental rates have fallen for seven consecutive quarters, according to CBRE. Still, pockets of opportunity persist. For instance, small bay is still popular, and landlords with tenants paying below-market rents can still capture some of the rental increases of previous years as these leases turn over.

Retail remains a bright spot in the Toronto real estate market. Grocery-anchored properties have generated the most interest, but other sub-classes are also performing well. While the loss of a major anchor tenant at several shopping centres may temporarily stress these properties, Canadian mall owners have previously adapted to such losses. Although not a replacement for the recently lost anchors, a few malls recently welcomed a national fashion retailer into anchor spaces. 

“Alberta is economically the most positive environment,” said one interviewee. And while U.S. tariff policies, soft oil prices, and decelerating population growth will cool Edmonton’s economic growth, it will still outperform Canada as a whole, according to the CBoC. The city’s real GDP growth is expected to increase from 1.4 percent in 2025 to 2.5 percent in 2026—just behind Calgary for top spot among major Canadian cities.

Edmonton is one of the most affordable housing markets in Canada. And it’s the only major Canadian city expected to build enough homes over the next decade to restore pre-pandemic affordability, according to CMHC. New home construction reached a record high in 2024, spurred on in part by municipal policies and programs. For instance, the city has changed zoning in some areas to allow greater density, made moves to speed up the approval process and created a fund to help cover shared public infrastructure costs for certain multifamily housing developments.

In addition to robust single-detached housing starts, CMHC expects the city’s rental stock to grow robustly through 2027, which will contribute to rising vacancy rates and slower rent growth—particularly as the city’s population growth moderates. Edmonton’s residential rental market is also seeing increased competition among landlords, leading some to offer incentives such as free rent periods or upgrades to attract tenants.

Several Edmonton office landlords said their portfolios continue to perform well, particularly class A or better office space downtown and suburban professional office space, such as that used by medical professionals. Return-to-office mandates are not having a large effect on how many people are working downtown, as a substantial portion of the space is occupied by government workers who have been slow to return full-time. 

Over the next two quarters, the market is expecting negative absorption in the government submarket. And although large tenants in high-quality buildings are renewing their leases, they’re taking the opportunity to right-size, which is contributing to negative net absorption in downtown class AA and A buildings, according to CBRE. Additionally, as the flow of international students slows, the university will likely slow its demand for downtown space. However, Edmonton is making ongoing efforts to revitalize its downtown core, including investments in public spaces, arts, and culture, which could help offset some of the challenges in the office sector.

In the first quarter of 2025, the Edmonton industrial market experienced its first quarter of negative absorption since 2020, according to Colliers, which attributes this largely to uncertainty stemming from U.S. tariff policies. While leasing activity rebounded in the second quarter, uncertainty remains, and demand is stronger for small-bay assets over large-bay properties.

Record new housing starts in Edmonton have created a need for supporting retail for new subdivisions, making food-and-drug-anchored neighbourhood retail a short-term winner from this growth, according to interviewees. This asset class is particularly attractive to institutional investors because it better aligns with their risk tolerance requirements compared to other sectors across the province.

Ottawa is expected to see real GDP increase by just 0.6 percent in 2025 due to slowing population growth, U.S. trade and tariff policies, and meagre employment gains in key industries such as government and health care, according to the CBoC. It expects growth to improve in 2026 and increase 1.7 percent.

The condo market is at a virtual standstill, so the focus has shifted to purpose-built rental, with new development heavily concentrated around current and future transit lines. While CMHC predicts this new stock may lead to a slightly higher vacancy rate, it says the new units will have higher rents, pushing average rents up. As one interviewee put it, many ground-oriented homebuilders are finding “row and low-rise is really the way to go,” as affordability issues are pushing homebuyers to consider suburban semi-detached and row houses. 

After two years of declining housing starts, the Ottawa housing market has shown signs of stabilizing this year, but it still faces headwinds. The federal government has announced spending cuts in the public sector and, as departments look to pare expenses, they’re most likely to do so by reducing labour and real estate costs. This is creating apprehension and uncertainty in a city with a substantial population of government workers, and this may slow down home sales. 

In 2019/2020, Public Services and Procurement Canada (PSPC) began planning to reduce its office portfolio by 50 percent over the following 10 years by using hybrid work and unassigned seating and disposing of properties that could be better used for other purposes, such as affordable housing. But a 2025 report by the Auditor General of Canada found that PSPC has only made a slight reduction in office space and may not achieve its originally stated goal. 

The federal government’s real estate rationalization efforts could accelerate in the coming years, potentially freeing up additional sites for redevelopment or alternative uses, such as affordable housing. As the government continues to evaluate its office space needs and implement cost-saving measures, more properties may become available for conversion or new development, offering opportunities to address housing shortages and revitalize underutilized areas of the city. 

But in the short term, planned reductions in government spending may put further pressure on a market that’s already seeing weak leasing momentum outside of premier properties. As one interviewee put it, “Return to office is not gaining a lot of steam in Ottawa and with the federal government in particular.”

The City of Ottawa has implemented measures to streamline office-to-residential conversions, but only a handful of these have occurred, and they’ve been done on smaller buildings. Rather than undertake retrofits, one developer is demolishing two downtown office buildings and intends to replace them with rental apartments. 

“The primary bet in Ottawa would be in industrial space and warehousing in particular,” said one interviewee. Although the vacancy rate rose to 2.5 percent in the second quarter of 2025, average net rent rose 9.9 percent year over year to $17.33 per square foot, the highest rate in Ontario and higher than the average rent in the Ottawa office market, according to Colliers. This is likely driven by a shortage of product, as the market has long been considered underbuilt by some, stemming in part from a limited supply of land zoned for industrial use. 

Yet Ottawa’s industrial market is also seeing its highest-ever total square footage under construction, at 3.6 million square feet, according to CBRE. This is largely the result of the construction of a new super warehouse for a major North American e-commerce company. Several other companies already have similar distribution centres in Ottawa and eastern Ontario, areas they find attractive for their proximity to the U.S. border and interstate infrastructure and relatively low costs. At the same time, there’s little appetite for newly built mid-market warehouse space but strong interest in reinvesting in and renewing existing mid-market assets.

Montreal’s real GDP is forecast to grow just 0.8 percent in 2025 and 1.8 percent in 2026 because of soft consumer and business confidence, weakness in the goods-producing sector, and a shrinking population as international immigration no longer offsets emigration, according to the CBoC.

In much of the country, it’s difficult to make the economics work for multifamily developments, but some can “make it work in Montreal,” according to one interviewee. For instance, one strategy used by some developers is to construct multifamily buildings on land associated with retail properties they own. This lowers development costs because they already own the land and, once built, the two property types benefit each other.

Virtually no condominium projects are expected to break ground in Montreal this year. Rental units will be the main driver of total housing starts, which are expected to increase for the second consecutive year, according to CMHC. With a growing rental stock and declining population, Montreal’s vacancy rate is expected to tick up from 2.5 percent in 2025 to 2.9 percent in 2027, according to CMHC.

Rental projects may start to look even more attractive after Quebec's rental tribunal, the Tribunal administratif du logement, approved the highest allowable rent increase in at least 30 years, with a maximum rate of 5.9 percent when heat is not included in the rent. At the same time, some municipalities in the Greater Montreal Area are exploring ways to streamline approval processes, which would make the suburbs even more attractive to developers. 

Despite the operating complexities, seniors’ housing is presenting an increasingly compelling opportunity for some market participants. Many operators have exited the space over the past several years due to a provincial regulatory regime that proved too costly and negative press during the pandemic. This has led to a reduction in stock in the face of an aging population, contributing to return on investment and net operating income increases that are attracting investors. Hotels are also piquing the interest of some investors amid high demand and strong revenue per available room. This is prompting some actors to approach hoteliers as they rethink planned condo projects.

In the second quarter of 2025, the office vacancy rate fell for the first time in nine quarters, declining 30 basis points to 19.3 percent, according to CBRE. However, the market is highly bifurcated, as the vacancy rate in AAA buildings is just 8.7 percent. While downtown Montreal remains what CBRE refers to as a “tenant-leaning market,” contiguous space in high-quality buildings is in short supply. Several interviewees said they believe this market could rebound in 2026.

Despite the economic challenges facing the city, Montreal’s industrial market experienced positive net absorption for the first time in two years in the second quarter of 2025, according to Colliers. However, the availability rate increased 20 basis points from the previous quarter to reach 5.4 percent, and the vacancy rate increased by 30 basis points to 4.5 percent. Construction remains steady, and up to 2.2 million square feet of space may enter the Quebec market as a major e-commerce company pulls out of the province, so vacancy rates may continue to rise.

Average net asking rent declined 1.0 percent from the previous quarter to $14.75 per square foot but remains higher than pre-pandemic levels, according to Colliers. Bay size is a strong determinant of asking rent, with the highest rates being achieved by bays under 25,000 square feet, followed by bays over 100,000 square feet. Bays in between are achieving the lowest rates, according to Colliers, which says this reflects strong local demand for smaller bays and a lack of supply in more urban areas. 

Montreal’s retail sector is drawing renewed attention, particularly with the opening of a new luxury shopping and entertainment mixed-use development. The project’s integration of retail with office, residential, and entertainment components exemplifies a broader trend in Montreal, where developers are using mixed-use strategies to enhance property values and create vibrant urban hubs. The project is expected to draw significant foot traffic and tourism, further supporting the city’s economic recovery and positioning Montreal as a premier retail destination in Canada.

“Saskatchewan and Manitoba are attractive for growth,” said one interviewee, alluding to the economic strength of the broader region. In the Prairies, Saskatoon has been a standout. This positive sentiment is strongly reflected in this year’s survey results. When asked to rate their own city’s prospects, Saskatoon-based interviewees were more optimistic than respondents in any other market.

In 2024, Saskatoon’s economic growth led all major Canadian cities and is expected to be on top again in 2025 with forecasted real GDP growth of 2.5 percent, according to the CBoC. And although other cities are forecast to lead the way in the coming years, Saskatoon is still expected to post a real GDP growth of 2.4 in 2026.

Spurred by this strong economic growth, the housing, office, and industrial real estate sectors are all seeing new construction. While it may be several years before shovels are in the ground, in August 2024, Saskatoon City Council approved a funding plan for a downtown event and entertainment district that will eventually see the construction of a new arena and convention centre.

Saskatoon also has some of the most affordable housing in Canada, according to the RBC aggregate housing affordability measure. This is despite near-record home sales in 2024, according to CMHC. It expects a tight resale market to lead to price growth, which will encourage robust home construction through 2027. Low vacancies and rising rents will also lead to an elevated level of rental construction, which will be the main contributor to total home sales. 

The suburban office market is outperforming the downtown office market. Within the downtown market there’s a preference for AAA space, although well-located class B space has performed well, according to Colliers. To take advantage of the strength in the suburban market, several projects are under construction.

Saskatoon’s industrial market is characterized by low inventory levels, low vacancy rates, and rising net rents, but this may be starting to change, according to Colliers. New speculative developments that are only partially occupied are contributing to rising vacancies. Nearly 300,000 square feet of new speculative builds are planned or under construction—this as companies are being cautious in the face of U.S. trade and tariff policies. Currently, demand is greatest for spaces in the 1,000- to 5,000-square-foot range and weak for spaces over 20,000 square feet, according to Colliers.

Trade and tariff policies will be among the biggest factors slowing the Halifax economy this year, along with slower population growth and consumer spending, according to the CBoC. After a 3.8 percent increase in real GDP in 2024, the CBoC predicts the city’s economy will only grow 1.3 percent in 2025 and edge down further to 1.2 percent in 2026—last among major Canadian cities.

Despite the forecast of muted growth for the near future, the perception is that over the long term, Halifax is in growth mode, and several new multiresidential developments will come to market over the next 24 months. Despite high construction costs and the risk that it may take some time to fully rent a development as vacancies tick up, rents remain healthy, and building continues. CMHC predicts that multi-unit construction will be the primary contributor to growth in housing starts through 2027.

Modestly priced single-family homes are selling quickly. While more expensive homes can take some time to sell, they're still selling faster than in years past, according to one market observer. The municipal government has made zoning changes to allow taller towers in select locations and permitted more units per lot in some locations. Still, several interviewees commented that they view land in the area as overvalued.

Overall, office vacancies in Halifax have trended downward since the third quarter of 2022, according to CBRE, but as in many other cities, the Halifax office story is one of bifurcation between high-end properties and the remainder of the market. While class C buildings may struggle to attract tenants and saw rising vacancies in the second quarter of 2025, the downtown class A vacancy rate is at its lowest since the third quarter of 2017, at 14.2 percent, according to CBRE. Similar activity has been seen outside the core, where newly built class A has outperformed, and interviewees believe the office sector will continue its upward trend. 

Several newly completed industrial developments have helped push Halifax’s industrial vacancy rate to 10.5 percent, up from below 3 percent just two years ago, according to Colliers. Yet demand is strong for small-bay industrial and net rents have been in the $15 per square foot range for six consecutive quarters, reflecting strength relative to other Canadian industrial markets, according to Colliers. Still, development continues, and new supply might put further pressure on overall vacancies.

Halifax is home to several major universities. Purpose-built student accommodation is in high demand and continues to attract investor interest and new development.

Tourism is important to the Halifax economy, and a sizable number of new hotels have opened on the peninsula in the past several years.

Vancouver’s economy is expected to see only modest growth over the next several years. The CBoC forecasts real GDP growth will climb slightly from 1.2 percent in 2025 to 1.9 percent in 2026. 

The city is among the world’s least affordable, to the point that housing costs are a drag on the economy because they reduce discretionary incomes and make it harder to attract and retain talent. High housing costs are also a major driver of Vancouver’s consistent emigration to more affordable nearby cities. This has typically been offset by the inflow of international immigrants, which have made up about 80 percent of population gains over the past decade, according to the CBoC. However, this inflow is expected to slow dramatically due to new immigration policies. Over the next two years, Vancouver is expected to see its first population decline since at least 1986, according to the CBoC. 

The condo market is expected to continue struggling for the next two years, according to several interviewees. They report low margins and believe companies will have to accept significantly lower margins until the existing supply of unsold newly constructed units is depleted, which could take 12 to 18 months. As a result, virtually no new projects are being initiated, which could hurt supply three to 10 years from now. The situation has prompted the province’s development industry to push the provincial and federal governments to roll back restrictions on foreign investment in the housing sector.

Developers are using various strategies to remain viable. For instance, some are laying off staff and selling assets, while others are taking on marginal projects to keep staff busy and not have to lay them off. But despite their best efforts, some developers have been unable to withstand the mounting pressures in the market. With rising insolvencies, opportunities are emerging for well-capitalized developers to take over existing projects. Although some contrarians are musing this might be a time to initiate projects again to take advantage of the lack of supply that will be coming onto the market several years from now, the consensus of interviewees is that it is still too early. 

An influx of rental units has come to market over the past year as firms shift their focus to rental development, attracted in part by CMHC incentives and expedited approvals. As a result, rental rates have flattened or declined slightly, putting pressure on returns. CMHC expects the rental vacancy rate, which was 0.9 percent in 2023, to be 2.1 percent in 2025 and to rise to 2.9 percent by 2027.

Municipal zoning changes have also led to increased density with the development of more laneway homes and the construction of fourplexes and sixplexes on land previously zoned for single-family use. The suburbs, where younger families are more likely to be able to afford a home, are seeing opportunities in townhouse development. Prime urban retail corridors, such as Robson Street and Oakridge, continue to attract investment and redevelopment activity. Grocery-anchored and essential service retail remain resilient, and mixed-use projects often include retail components. Suburban retail nodes are also benefiting from population shifts.

Leasing activity moderated in the Metro Vancouver office market in the second quarter of 2025, but it’s still at levels above the five-year average, according to CBRE. The suburban market is outperforming the downtown market, and within the downtown market, AAA is outperforming lower-quality assets, according to CBRE. The Vancouver office market has performed better than the Toronto market, and many interviewees consider office one of their best bets in 2026 as return-to-office mandates take hold.

While the industrial market has peaked or plateaued in markets such as Toronto, it remains strong in Vancouver, and in British Columbia in general, and it is expected to remain strong, given the limited space available for industrial development in Vancouver. Despite this positive outlook, there’s still a spread between buy and sell values, and purchasers are proving they’re willing to be patient. Small bay provides particularly attractive opportunities due to its flexibility, its ability to grow and transition between different industries and the difficulty in finding tenants for some larger assets. 

Industrial rental rates have plateaued or declined from their recent highs, but they’re still significantly higher than they were 10 years ago. U.S. tariffs are weighing on the minds of industrial tenants, but interviewees said they’re not seeing a business impact yet and tenants are still paying their rent.

Some feel Vancouver has a shortage of hotels. While travel and tourism have rebounded, supply has not kept up, and the province has introduced new regulations that will limit the availability of short-term rental accommodation. This is making hotels an attractive asset class, with interviewees reporting hotels are performing well and appraisal values are high for some existing properties. Early moves to take advantage of this opportunity have resulted in the development of several new serviced apartment properties.

Winnipeg’s diversified economy will help it outperform most major Canadian municipalities in the face of the economic challenges facing the country, according to the CBoC. It predicts the city will see real GDP growth of 1.1 percent in 2025 and 2.2 percent in 2026. Still, Winnipeg’s goods, manufacturing, transportation, and warehousing sectors are expected to slow in the face of U.S. tariffs, according to the CBoC.

Winnipeg’s steady population growth in recent years has come mostly from inflows of international immigrants. As such, new federal immigration targets will dramatically slow the city’s population growth, affecting several sectors including educational services, according to CBoC forecasts.

The city has one of the most affordable housing markets in Canada, according to the RBC aggregate housing affordability measure. Price growth for single-family homes is expected to be slower than in other Prairie markets, according to CMHC. The agency also forecasts vacancy rates to increase gradually but remain below historical averages through to 2027 and rent growth to be strong in 2025 before moderating.

Winnipeg is expected to see steady, gradual growth in housing starts through 2027, according to CMHC. This will be led by purpose-built rental, with CMHC forecasting single-detached construction to slowly decline over the medium term. Through grants and tax increment financing, the city reportedly helped fund 28 housing developments through various programs and announced it had chosen developers to build affordable housing on five city-owned properties. The CBoC also noted the province has removed sales taxes on new rental housing and does not cap the size of rent increases on newly constructed development. 

“Exurban and suburban markets will outperform urban cores,” said one interviewee. This prediction seems to be playing out in Winnipeg’s office markets. In the second quarter of 2025, the downtown office market had a vacancy rate of 17.7 percent, while the suburban market had a vacancy rate of only 11.0 percent, according to CBRE, which notes that with lower rents and locations near residential areas, suburban offices are attractive to firms with hybrid work policies.

Leasing activity in the industrial market remained steady in the second quarter of 2025, and national investors have shown interest in the market, according to Colliers. Still, the brokerage firm notes that U.S. trade policies and high construction costs are engendering caution around starting new construction projects and most sales were for properties less than 8,000 square feet.

The transformation of downtown Winnipeg continues. Work has begun on turning a major downtown retail property into a complex that will include a 265,000-square-foot health centre, a 15-storey residential tower in which up to 40 percent will be rented at affordable rates, neighbourhood and community spaces, parks, retail, and parking.

Quebec City is expected to have one of the lowest growth rates of major Canadian cities as U.S. trade and tariff policies and new federal and provincial immigration targets create uncertainty for businesses and consumers and lead to a deceleration of population growth, according to the CBoC. It predicts the city will see only 0.2 percent real GDP growth in 2025 and then pick up to 1.3 percent in 2026. 

There’s strong demand for housing in Quebec City, fuelled by decreasing interest rates and a low unemployment rate. Housing starts are expected to remain relatively high through 2027, with apartments accounting for most of them, according to CMHC. Despite this, strong demand means the rental market will remain tight. Vacancy rates are expected to be 1.0 percent in 2025 and to only rise to 1.5 percent by 2027, while rents for the average two-bedroom unit will rise 8.3 percent over the same period, according to CMHC.

Despite enthusiasm to build in Quebec City, its aging infrastructure threatens to slow development. For example, in early 2025, Lévis, a city across the river from Quebec City, was forced to impose a construction moratorium for up to two years while it increases the capacity of two water treatment plants.

In the second quarter of 2025, the office vacancy rate in Quebec City stood at 14.1 percent, an improvement on the 11-year high of 15.3 percent recorded the previous quarter, according to CBRE. This high vacancy is the result of the provincial government and several tenants in the financial industry vacating their spaces or downsizing due to hybrid work policies resulting in low in-office attendance. No new construction is taking place and despite the increase in the vacancy rate, net asking rates remain stable. 

The Greater Quebec City industrial market slowed in the second quarter of 2025 because of increased supply. It experienced negative net absorption, the vacancy rate increased to 5.8 percent and net asking rents fell to $13.80 per square foot, down 0.7 percent from the previous quarter, according to Colliers. Most new buildings are build-to-suit, with tenants looking for modern buildings with clear heights of 24 feet or more, multiple docks, and flexible layouts, according to Colliers.

Interest continues in constructing multifamily developments on excess land associated with malls and construction of several new boutique hotels is underway. Some interest has been expressed in building data centres in the region. However, new development of these centres is likely to be curtailed due to provincial government restrictions on power procurement, which make it difficult to secure new energy agreements.