Montreal Real Estate Forum Highlights Evolving Investment Trends and Canada Square’s $200M Retrofit
By Elliot Higgins, CFA – Associate, and Daniel Lester – Analyst
Largo recently attended the Montreal Real Estate Forum and gained valuable insights by reconnecting with our lending groups and investors, and engaging with industry experts through speeches and breakout rooms. We were pleased to note a significantly more positive sentiment compared to similar events earlier in the year. While initial cautiousness was driven by concerns over potential tariffs and recession fears, this forum underscored the long-term strength and resilience of the Montreal and broader Canadian real estate markets.
Shifting Investment Appetites & Market Stabilization:
- Industrial Market Stabilization: Experts noted a stagnant appetite for the industrial sector, primarily due to stabilizing rents and a general stabilization of the market after a period of intense growth and competitive pressures. This suggests the industrial sector is maturing, offering more predictable but potentially lower rapid growth.
- Retail Sector Resurgence: The retail sector emerged as a highly attractive investment, directly contrasting with the “retail is dead” narrative prevalent just a few years ago. This resurgence is largely due to a significant lack of new retail supply entering the market and widespread innovation in creating “internet-proof” retail experiences. Industry experts highlighted that these revitalized retail assets are now delivering reliable cash flows, with cap rate suppression further boosting investor returns. This trend points to a strong focus on experiential retail, where consumers are drawn by unique activities and services rather than just products. We’re also seeing a rise in mixed-use developments that integrate retail with residential, office, or entertainment spaces, alongside a push for strong community integration to draw consumers back into physical locations.
- Alternative Asset Classes Gaining Traction: The forum highlighted the increasing desirability of alternative asset classes. Self-storage, long prominent in the U.S. but now gaining momentum in Canada, was a key point of interest due to its stable demand. Similarly, student housing was identified as a particularly attractive alternative, driven by a recognized “dire need” for more units and robust fundamentals, attracting both local and international capital. This diversification reflects a search for higher yields and reduced volatility outside of traditional sectors.
The persistent housing supply concern in Montreal is increasingly seen as an affordability crisis, where the core issue is costs rather than a lack of physical units. Developers face significant headwinds in delivering new housing, particularly condos, due to high construction costs, and unpredictable bureaucratic barriers. Experts urged the government to ease bureaucratic approval processes to encourage investment in the Canadian market.
While significant headwinds remain for residential development, the overall Canadian and Montreal markets are viewed as fundamentally strong. The forum emphasized the importance of collaboration between the public and private sectors, innovation in development strategies, and exploring diverse asset classes to navigate the current climate and capitalize on long-term opportunities. The positive shift in sentiment relative to earlier in the year suggests that the industry is finding ways to adjust and move forward, despite the ongoing challenges.
Canada Square Undergoes Major Retrofit and Redevelopment
Oxford Properties and CT REIT announced on June 9, 2025, a significant combined investment of over $200 million to retrofit Canada Square, a key midtown Toronto hub. This transformative project is anchored by a new 20-year, 550,000 square foot office lease with Canadian Tire Corporation (CTC), who has called Canada Square home for over 50 years. The “made in Canada” solution will modernize 680,000 square feet of office space across two towers, specifically 2180 and 2200 Yonge Street. Over 80% of this modernized space will be anchored by CTC, who is also investing to build a next-generation headquarters for thousands of its employees within the revitalized complex.
The project also includes plans to enhance transit access with an upgraded TTC entrance and the introduction of new retail spaces. This initiative not only revitalizes a major urban center but also sets the stage for future mixed-use development, including critically needed new rental housing. This continued investment comes as the Bank of Canada held its policy rate at 2.75% on June 4, 2025, providing a stable, albeit cautious, monetary environment amidst global trade uncertainties, underscoring a significant long-term commitment to urban development and economic stability in Toronto despite prevailing financial headwinds. This timely investment highlights the ongoing confidence in Toronto’s real estate market and its capacity for sustained growth.
