Canadian-based commercial property investors remain committed to U.S. real estate, defying predictions that political uncertainty and tariff tensions could dampen cross-border investment.
Overall, Canada ranked as the second-largest source of cross-border capital for global property markets through September, and the United States was the largest destination for this capital, capturing 30% of outbound investment by Canadian investors, according to a report from MSCI, formerly Morgan Stanley Capital International. The outflow pattern by investors upended the expectation among some real estate watchers that the trade dispute with the United States would prompt Canadian investors to redirect their focus to other markets across the globe instead.
Through Sept. 30, Canadian property investors had acquired US$5.842 billion worth of assets in property deals proiced US$10 million and higher, according to MSCI.
The MSCI report said the availability of assets in which to invest in the United States, particularly in the data centre facilities market, influenced the trend of Canadian dollars continuing to flow south of the border. Canadian commercial-property investors must often look outside their home country to deploy capital because there is typically very little ownership turnover among its commercial properties, the report suggests.
“The U.S. is a natural first destination for much of this capital given its proximity and the size of its property market,” said Jim Costello, author of the MSCI report.
Canada's trade dispute began in February, when U.S. President Donald Trump announced 25% tariffs on Canadian goods that took effect March 4 and prompted retaliatory measures.
In March, several real estate economists and analysts across Canada agreed that costs would increase and threaten to disrupt a recovery that has benefited the commercial property market.
The dispute lingers after negotiations between the countries ceased when Ontario officials released a video that took aim at the tariffs.
Office investment falls
While the U.S. represents the largest destination for Canadian real estate investment so far this year, its share is down compared to long-term trends. Since 2007, purchases of property assets in the U.S. have represented 56% of all outbound Canadian capital.
“One might see this falling share and assume that the decline is about politics, but sector allocations are at play as well,” the MSCI report notes.
The declining allure of U.S. office properties plays a factor in the trend, according to the report.
Between 2015 and 2022, the office sector was the primary focus for Canadian investors abroad, accounting for 26% of outbound capital. In contrast, recent years have seen a shift toward industrial, logistics and specialty sectors, such as data storage facilities.
According to MSCI, the mission-critical facilities accounted for nearly 8% of Canadian outbound investment in 2025, up from less than 2% five years ago, while industrial assets captured over 20% of capital flows, reflecting a structural shift toward resilient income streams and digital infrastructure.
This trend is exemplified by the joint venture between Ontario Teachers’ Pension Plan and Sagard Real Estate, which recently acquired a 163,402-square-foot industrial facility in Houston as its first purchase under a new partnership targeting infill industrial properties across major U.S. logistics markets, as reported in CoStar News. The deal reflects both institutions’ conviction in the fundamentals of the U.S. industrial real estate sector.
The Real Assets division of MSCI provides data-driven insights into property investment trends worldwide to help institutional investors make decisions.