More than nine out of 10 Avison Young professionals in Canada foresee commercial real estate activity increasing or at least holding steady in the second half of 2025, according to a mid-year survey by the real estate services firm.
Only 7% of Avison Young brokers who responded to the in-house survey had a negative outlook for the sector and predicted that activity would decline.
Avison Young, a global brokerage firm with its headquarters in Toronto, said that while the first half of 2025 was marked by uncertainty and driven by political shifts and macroeconomic pressures, a growing sense of momentum and opportunity is emerging across the country.
"When I look at this what I see is going into last fall we started seeing green shoots and improvement and that was based on our transaction volumes starting to improve and some of asset classes getting more attention than they were before," said Mark Fieder, a principal and president of Avison Young Canada, in an interview with CoStar News. He also said the reaction from the real estate company's professionals is an extension of what they are hearing from clients.
"It's a much broader opinion being filtered through our brokers," Fieder said. "It's a pretty broad representation, and it's also a national perspective."
Across all real estate asset classes, 45% of survey respondents said they expect activity to climb in the second half of the year, while another 48% said it will be at the same level as in the first half.
Fieder said falling interest rates have helped drive optimism in the sector, but the battle with the United States over tariffs has also impacted the market.
"It's really about the uncertainty," said Fieder. "Everybody is talking about it. It's the uncertainty, we know tariffs are not going to be as bad as we thought they would be."
Avison Young's survey results suggest a shift toward higher capitalization rates. The real estate company said, "Investors and occupiers alike are recalibrating their strategies in response to shifting demand patterns, supply chain adjustments, and changing workplace behaviours."
Office sector gains optimism
By asset class, respondents were most optimistic about the office sector, with 54% predicting a better second half and 46% seeing no change. The firm said the high level of optimism also reflects the sector's recovery from a low point.
The industrial sector, which had been on a roll of strong performances over the past several years, received the most negative outlook. 17% of survey respondents expected the market to be down, and only 35% predicted a better second half. A little less than half, or 48%, forecast the status quo.
"There were things that people paused at the beginning of the year, not knowing, but now they have to carry on with business," said Marie-France Benoit, principal and director of market intelligence with Avison Young Canada, referring to the impact of the tariff battle, in an interview.
"A lot of companies are now firming up their return to office policies. They need more space," Benoit said. "There were anecdotes [about companies needing more space]. But now we are starting to see it in the data. It's not a lot, and there is space to be absorbed, but there is no new construction."
As for Fieder, he said retail, industrial and multifamily remain popular acquisition targets for buyers, but as demand for office space shifts, he expects the office recovery will lead to more investor interest in that asset class.
"The financial sector is calling back its people [to the office]," he said. "It's the worst-kept secret that those institutions are in the market for new space. It is pure absorption, and that is starting to take hold.
"People have been home to some degree for five years and a lot of companies have hired people in five years and they haven't addressed their office space needs. Not just in Toronto, but in other major markets as well."