Canada Market Update: Grocery-Anchored Retail and Class A Office Drive Investor Confidence
By Elliot Higgins, CFA – Originator
Grocery-Anchored Retail Leads Nationwide Return to Stability
After years of subdued activity, investors and lenders shifted toward stability, with grocery-anchored retail emerging as the preferred asset class. In 2025, this segment became Canada’s most resilient and sought-after retail asset, with vacancy tightening to historic lows of 3-4%. Limited new supply, combined with ongoing expansion plans from major grocers such as Loblaw, Empire, and Metro, has fueled sustained demand.
Investor appetite for these defensive assets continues to grow, supported by necessity-based spending and constrained development amid high construction costs. Grocery-anchored centers have consistently outperformed enclosed malls, drawing competitive bids even in secondary and tertiary markets. According to Altus Group’s year-end investment trends survey, food-anchored retail ranked as the top asset class by a wide margin—underscoring investor confidence in its long-term stability.
Source: Altus Group
Office: Turning Point Led By Well-Located “Trophy Assets”
Canada’s major office markets are regaining momentum as investor liquidity returns to the market and lenders have regained an appetite for the product. Rising bid activity, strengthening rents, and tightening vacancies point to continued recovery into 2026.
In a strong vote of confidence for Canada’s downtown office markets, Oxford Properties reaffirmed its commitment this past June—acquiring full ownership of a seven-tower, 4-million-square-foot Class A office portfolio spanning Calgary and Vancouver.
Toronto’s financial core shows a similar flight to quality, with tightening availability for Class A space and an active transaction market in Q4, including 70 York Street and 141 Adelaide West. Strong leasing momentum is also evident nationally: Colliers reports Toronto office leasing reached a five-year high in Q4 2025, with 1.9 million square feet of positive net absorption driven by banks and financial services firms.
Class A office space in Canada’s major markets continues to lead the recovery, driven by banks and national tenants returning to premium workplaces. As activity builds, that demand is expected to filter into secondary assets and markets.
Conventional Financing Gains Ground in Canada’s Multifamily Market
Conventional financing is becoming a preferred option for multifamily developers across Canada relative to CMHC-insured mortgages. Once CMHC’s 1.7%–4.0% premiums and fees are factored in, the cost advantage starts to dissipate, while conventional lenders offer faster execution and fewer restrictions on structure and use of proceeds.
Timelines for conventional deals typically range from four to six weeks, compared to twelve weeks or more under CMHC programs. In today’s softened condo market, developers are increasingly valuing the flexibility and speed that conventional financing provides.
