Commercial Real Estate Division



In key centres, RE/MAX brokers have noted that buyers and sellers have made a concerted effort to transact. In an analysis of closed transactions in the Greater Toronto Area in Q1 2023, for example, the number of vendor take-back mortgages (VTBs) as a percentage of total sales over $2 million rose substantially over year-ago levels, climbing to 9.55 per cent, up from 5.82 per cent in Q1 2022, with VTBs now representing almost one in 10 transactions*. In Western Canada, investors took advantage of attractive financing for construction of purpose-built rentals through Canada Mortgage and Housing Corp. (CMHC), while those interested in existing buildings cut deals that allowed for the assumption of CMHC mortgage financing at lower interest rates.

Real estate investment trusts (REITs) are now slowly venturing back into the market, driving demand for industrial, multi-family, retail and, to a lesser degree, office product. Conditions are ripe for investment, particularly for multi-family properties, given growing demand for housing in markets across the country. According to Statistics Canada, the nation’s population climbed to just short of 40 million in January of 2023, the highest annual population growth on record. The increase has served to further exacerbate the country’s already critical housing shortage, which showed vacancy rates for purpose-built rentals fell to 1.9 per cent nationally and condominium rentals dropped to 1.6 per cent, according to CMHC. Rental rates have risen in response to tight inventories in markets across the country, with double-digit increases noted year-over-year in most markets. The trend has bolstered already strong demand for existing multi-family, but product is scarce. RE/MAX found that for some Class B and C buildings, the answer may lie in repurposing their buildings, as demand for residential housing reaches critical levels. Although not all buildings will be ideally suited for retrofit, some major centres are providing incentives to encourage conversion to residential. Calgary introduced the Downtown Calgary Development Incentive Plan in 2021 which provides a $75-per-square-foot subsidy to developers for converting offices to residential, with 10 buildings approved to date. By way of conversion, more than 1,200 new homes will be created and approximately one million square feet of commercial office space will be eliminated, breathing new life into Calgary’s downtown core. There are a growing number of buildings targeted for conversion in various stages of planning and development in Halifax, Ottawa, London, Toronto and Winnipeg.

“Commercial office markets are experiencing a transformational shift in the aftermath of the pandemic,” says Alexander. “Downtown cores were virtually decimated by Covid restrictions and have yet to come back to life in many Canadian centres. The conversion programs now underway ensure that our city centres remain vibrant in the future, restoring vital foot traffic that is the lifeblood of the country’s core urban areas. The retrofit and renovation activity not only brings desperately needed residential product online, but it also supports the surrounding retail shops and restaurants, transit systems, and the overall health of our downtown neighbourhoods.” The most significant holdback is the red tape that currently exists in regard to zoning amendments, applications and approvals at local and provincial government levels. With housing supply at critical levels and an immigration commitment of at least 800,000 new Canadians over the next two years, governments must be prepared to act quickly. *Compiled from data available from RealTrack


RE/MAX also found that lower inventory levels, across the board and in almost every asset class, have hampered activity to some extent. In the first three months of the year, the shortages sparked competition, particularly in the industrial segment. Once again, supply plays a critical role and availability remains tight for quality product. Without an influx of available listings, this trend is expected to continue through to year-end, assuming supporting positive fundamentals remain in place.

"Overall, a number of encouraging indicators characterize Canada’s commercial real estate market,” says Alexander. “Renewed demand for housing has sparked builders and developers’ interest, with projects placed on hold in the latter half of 2022 once again on the table. Employment growth may support the recovery of the country’s most lacklustre segment, although a changed culture favouring work-life balance suggests a return to pre-pandemic occupancy in the office sector is unlikely. On the retail side, consumer gravitation back to bricks and mortar stores after some post-pandemic online fatigue will bode well for business, while industrial will remain the sweetheart investment, drawing suitors from both a local and global audience. The momentum is building, with some pent-up demand evident. The fundamentals underpinning the market squarely supporting ongoing commercial activity in the year ahead.”

Senior Manager, Public Relations & Content | RE/MAX Canada

Lydia McNutt is an award-winning writer, editor and public relations professional, with a focus on all things real estate. At RE/MAX Canada, Lydia translates market data and trends into educational and entertaining content for homebuyers and sellers, while furthering the RE/MAX brand's reach, nationally and globally. Explore timely news articles, market trend reports and thought-leadership on Lydia has been published nationally on topics ranging from real estate to architecture, design and decor, finance, business, technology, entertainment and lifestyle topics. Email Lydia at

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