Investor Confidence Holds Steady in Canada's Multi-Suite Residential and Commercial Real Estate Markets in Q2 2025: Morguard

Executive Summary

• Morguard released its 2025 Economic Outlook and Market Fundamentals Second Quarter Update, highlighting strong investor confidence in Canada's multi-suite residential rental properties and resilient industrial and office asset classes despite global trade tensions.
• Multi-suite residential transaction volume surged 39.4% quarter-over-quarter to $812.0 million, driven by healthy long-term fundamentals and demand outpacing supply, though rental demand is expected to moderate due to lower immigration targets.
• The Canadian economy showed signs of cooling in Q2 2025 with trade disruptions weighing on job creation and spending, while core inflation remained under control; the Bank of Canada faces challenges balancing growth support with price stability.

Key Details

• Multi-Suite Residential Market:
  • Transaction volume reached $812.0 million in Q2 2025, a 39.4% increase quarter-over-quarter.
  • Demand continues to outpace supply, supporting positive investor sentiment.
  • Asking rents are projected to climb through next year as newly constructed supply enters the market, despite expected moderation in rental demand due to lower immigration and temporary worker targets.
• Commercial Real Estate (Industrial & Office):
  • Industrial: High-quality logistics and warehouse properties remain highly attractive; approximately 50% of industrial properties sold were purchased by end-users opting to buy rather than lease at elevated rates. Private capital groups remain active in a less competitive market.
  • Office: The leasing market remained stable with modest upward pressure on rents for trophy assets in core locations. Demand is focused on highly-amenitized spaces.
  • Retail: Investment activity moderated following a strong start to the year, though sales of retail properties have remained brisk over the past year.
• Economic Factors:
  • Canada's economy cooled in Q2 2025 following stronger performance earlier in the year.
  • Trade disruptions and tariff pressures negatively impacted job creation, consumer spending, and business investment.
  • Core inflation remains largely under control.
  • The Bank of Canada is tasked with balancing economic growth support against its mandate for price stability.
• Company Context:
  • Morguard Corporation manages a portfolio valued at $19.1 billion, including retail, office, industrial, hotel, and residential holdings.
  • The company is celebrating 50 years of leadership in the industry.

Notable Quotes

• "Canada's real estate market continues to be supported by solid fundamentals that foster long-term optimism and growth," said Angela Sahi, President and Chief Operating Officer of Morguard. "Even amid market volatility, investor interest in high-quality industrial and office properties remains strong."
• "While global economic conditions continue to evolve, the Canadian real estate market is showing encouraging signs of stability," said Keith Reading, Senior Director, Research at Morguard. "With balanced fundamentals and continued investor interest in core sectors, the outlook for the second half of 2025 remains positive."