C
anada's commercial real estate market is outperforming its US counterpart, according to a Colliers report. The country's stronger population growth, more favorable lending environment, and tighter supply conditions make it an attractive investment opportunity for foreign investors. Adam Jacobs, Colliers' head of research, notes that Canada's population has consistently grown faster than other developed economies, with data showing it grew at twice the US rate in 2022 and nearly triple the rate in 2023 and 2024.

    While immigration has slowed this year, Colliers expects Canada to regain its demographic edge by 2027. Jacobs attributes growth to economic inflows rather than polarization. He emphasizes that population growth drives demand for apartments, retail spending, and labor markets, making it a "tailwind" for the real estate industry.

    The US has traditionally been seen as a safe haven during global instability, but Jacobs argues this perception is shifting. Canada can't match the US in size or liquidity, but its stability is perceived differently now. The interest rate gap between Canadian and US 10-year bond yields is significant, with Canada's rates sitting over a point below US levels.

    For real estate, which is debt-sensitive, this gap is critical. Jacobs notes that one percentage point may not seem like much, but given the leverage in real estate, it makes a massive difference. This spread has created a more accommodating environment for Canadian development and refinancing, although bottlenecks such as municipal approvals still hinder new projects.