A new report on commercial retail trends in Canada pointed to signs of an “upswing in demand,” with strength in retail and industrial sectors despite the ongoing struggles with office spaces.

RE/MAX Canada president Christopher Alexander said his organization’s 2023 Commercial Property Report, published Thursday, shows that “a number of encouraging indicators characterize Canada’s commercial real estate market.”

“The momentum is building, with some pent-up demand evident. The fundamentals underpinning the market squarely supporting ongoing commercial activity in the year ahead,” he said in a news release.
The report, which looked at trends across 12 Canadian cities in the first quarter of 2023, also pointed to areas where joint commercial and residential developments could provide solutions to the country’s short supply of housing.


Industrial real estate such as warehouses and distribution centres was one of the strongest asset classes, the report said, with consistently good numbers in sales and lease activity across the country.

Rising property and lease costs are pushing investors in Ontario and British Columbia into provinces with more affordable prices, giving those regions a boost from the “spillover of demand.” That effect saw increased industrial real estate sales in cities like Edmonton, Calgary, St. John’s, Halifax and Saskatoon.


The report found that 92 per cent of markets studied for the report showed “solid activity” in retail centres. As a result, landlords have been “pouring” investment into major shopping malls across Canada.

There are also signs of greater interest in mixed-use “live-work-shop” spaces, the report said, with a growing number of residential applications on commercial zoned properties.


Real estate investment trusts, or REITS, are “slowly venturing back into the market,” the report said, helping push up demand for industrial, retail and residential real estate, as well as some office spaces.


Alexander called office spaces “the country’s most lackluster segment,” with little hope of returning to pre-pandemic norms.

While employment growth might bolster some recovery, he said that a “changed culture favouring work-life balance suggests a return to pre-pandemic occupancy in the office sector is unlikely.”

RE/MAX’s report bore that out, finding the office sector was struggling “in markets across the country” with the rise of hybrid work. Some companies are trying to incentivize employees back to work with a “more social component” of office life, while others are considering reducing their physical footprints.


More cities are showing interest in converting unused office space into residential housing units.

Six out of 12 surveyed cities reported some conversion activity, the report said. It referenced a conversion program underway in Calgary that offers subsidies for office-to-residential conversions, and noted buildings targeted for conversion in Halifax, Ottawa, London, Toronto and Winnipeg.

The concept could provide a solution for office buildings with dwindling attendance, particularly “as demand for residential housing reaches critical levels.”


Zoning rules and red tape were the most significant barrier to office-to-residential conversion projects, though, and the report said “governments must be prepared to act quickly” on the issue.

Red tape was also flagged as a factor holding back “all types of new construction,” along with development fees, the report noted, despite “solid” land sales in Canadian urban centres.