Canada's Commercial Real Estate Markets Poised for Gradual Stabilization and Growth in 2026: Morguard

Canada's Commercial Real Estate Markets Poised for Gradual Stabilization and Growth in 2026: Morguard

MISSISSAUGA, ON, Jan. 15, 2026 /CNW/ - Morguard Corporation ("Morguard") (TSX: MRC) today released its 2026 Canadian Economic Outlook and Market Fundamentals Report, providing a comprehensive analysis of the 2025 real estate market and trends to watch for in 2026. The 28th annual edition of the report highlighted a gradual stabilization in Canada's multi-suite residential rental market, generally healthy conditions in the industrial sector, and an improved outlook for the nation's office market. The full report, including regional insights and accompanying video, are available at morguard.com/research.

"Canada's economy shifted into a lower gear in early 2025 as U.S. tariffs and global trade tensions weighed on growth and business confidence," said Angela Sahi, President and Chief Executive Officer of Morguard. "Even in this slow-growth environment, high-quality real estate has continued to demonstrate resilience, supported by stable income performance and a steady flow of private capital into well-located, stabilized assets"

Overall, while Canada's economy is expected to grow at a relatively slow pace in the near term, the flow of investment capital into commercial real estate is projected to increase as borrowing costs ease, lender appetite improves, and bid-ask spreads narrow.

"We're beginning to see the signs of renewed momentum across Canada's major commercial property sectors," said Keith Reading, Senior Director, Research at Morguard. "Industrial and retail assets continue to post healthy fundamentals, and multi-suite residential demand is expected to firm as the economy stabilizes. As lending conditions improve, investors will increasingly re-engage with opportunities that offer stable and increasing income streams and long-term growth potential."

Multi-Suite Residential Real Estate
Canada's multi-suite residential rental market softened in late 2024 and 2025 as weaker rental demand coincided with a notable increase in new supply. However, buyers remained confident in the asset class's income-driven stability and positive medium-to-long-term outlook. Demand for multi-suite residential rental properties will continue to exceed supply.

Looking ahead, multi-suite residential rental fundamentals are expected to gradually stabilize. Modestly stronger economic growth and improving youth employment in the latter half of 2026 are expected to support firmer rental demand. As demand strengthens, vacancy is projected to stabilize, landlord incentives should ease, and asking rents are expected to level off as the market moves toward a more balanced environment through 2027.

Commercial Real Estate
Canada's office leasing market performance outlook improved over the recent past, driven by return-to-office mandates from major financial institutions and the public sector. Building occupancy increased as more employees returned to their physical workplaces. Notably, demand for high-quality, efficient space with attractive amenities was particularly evident. Investors are expected to remain focused on trophy assets, high-quality class A buildings, and value-add or conversion acquisition opportunities.

Industrial leasing fundamentals remained relatively healthy in 2025, even as new supply delivered to the market drove availability higher. Investment sales activity steadied, with quality logistics and warehouse assets continuing to trade at a healthy rate. In 2026, the sector's outlook remains favorable, supported by stable demand, moderating availability, and positive income-driven performance.

High-quality retail space remained in short supply in Canada's most productive centres and shopping nodes. The retail leasing market tightened further through to the end of 2024 and into 2025, with vacancy holding at healthy levels nationally and in community and neighbourhood formats. Landlords were generally able to achieve strong rents for high-quality space, supported by solid tenant demand. Overall, supply constraints in most major markets are expected to keep conditions tight and support resilient rental and income performance.

Economic Factors
Canada's economy shifted into a lower gear in 2025 as trade tensions with the U.S., including tariffs on certain Canadian exports, weighed on growth, employment and confidence. Looking ahead, Canada's economy is expected to grow at a relatively slow pace over the near term, with modest growth projected for 2026.

Despite the slow-growth backdrop, investment capital has continued to flow into Canadian commercial real estate at a consistent rate. High-quality, stabilized assets in the retail, industrial, and multi-suite residential rental sectors remained well-supported by investors in 2025. Over the near term, the flow of investment capital into commercial property is expected to increase as borrowing costs ease, lender appetites improve, and financing availability rises.

• Demand for multi-suite residential investment properties is expected to gradually stabilize as fundamentals firm by the end of 2026.
• Investor confidence in the industrial sector will remain strong, supported by healthy fundamentals and improving lending conditions.
• Canada's retail leasing market is expected to remain tight, with strong demand for high-quality space driving retailer expansion.
• Canada's economy is expected to grow modestly in 2026, given a projected easing of trade tensions while investment activity gains momentum.

The 2026 Canadian Economic Outlook and Market Fundamentals Report is a comprehensive analysis of 2025 real estate markets and 2026 real estate investment trends to watch for in Canada. The full report, including analysis for the real estate markets of Halifax, Montreal, Ottawa, Toronto, Winnipeg, Regina, Saskatoon, Calgary, Edmonton, Vancouver, and Victoria, is available at morguard.com/research.

About Morguard Corporation 
Morguard Corporation is a real estate investment company listed on the Toronto Stock Exchange (TSX: MRC). The company and its subsidiaries, Morguard REIT (TSX: MRT.UN) and Morguard North American Residential REIT (TSX: MRG.UN), own a diversified portfolio of real estate assets across multiple classes, including office, industrial, retail, multi-suite residential and hotel. Morguard also provides real estate management services to institutional and other investors. As at September 30, 2025, Morguard's owned and managed portfolio of assets was valued at $19.0 billion.

For more information, visit morguard.com.

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SOURCE Morguard Corporation