Commercial real estate north of the border might be more attractive to investors than the market in the U.S.
With stronger population growth, a better lending environment and tighter supply conditions make Canada a better option for commercial real estate investment, Yahoo! Finance reported, citing a new Colliers report.
For starters, Canada’s population grew at twice the rate of the U.S. in 2022 and nearly three times the rate in 2023 and 2024, according to the report. That in itself helped drive economic growth, including commercial real estate.
“Population growth kind of drives everything in the real estate world — apartments, retail spending, the labor market,” Adam Jacobs, Colliers’ head of research, told the publication. “It doesn’t solve every problem, but it’s a tailwind for everything.”
The Canadian commercial real estate market is also less saturated than that of the U.S., with a more favorable supply volume.
The U.S. has 16.5 square feet of office space per capita, according to Colliers; by contrast, Canada has 12.6. For retail space, the U.S. has 23.5 square feet per capita compared to 16.8 in Canada. Because Canada simply has less supply available, new developments don’t present as much of a threat to assets as they do in the U.S.
“If you own an existing asset here, it may be more valuable long term,” Jacobs said. “You’re not facing all that competition of more and more assets in the market competing against you.”
Because development is slower and pension funds are more prevalent in Canada, there are fewer fire sales across the country and a steadier market overall. As a result, Canada’s commercial property price index has largely been positive since 2022, while values down south declined. Canada overall has outperformed every other G7 nation and other markets like Singapore and Hong Kong over the past five years.
Couple that with Canada’s lower debt-to-GDP ratio and you have a “steadier option” for investment, according to Jacobs. “Normally, when the world looks scary, money runs to the U.S. — but right now, they’re creating some of the chaos themselves,” he said.
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