Canadian real estate investor confidence has reached its highest level in 15 years, with investment activity recovering and senior housing, retail and industrial properties emerging as leading opportunities for 2027, according to a new report from PwC Canada and the Urban Land Institute.
Commercial real estate investment totalled $16.2 billion in the second quarter of 2026, the highest level since early 2022, according to CBRE. However, the recovery remains uneven across property types and regions, with access to equity financing, operating challenges and changing market conditions influencing investment decisions.
The Emerging Trends in Real Estate 2027 report identifies Calgary, Toronto and Edmonton among the Canadian markets to watch, while highlighting opportunities in data centres and infrastructure-related development.
"Optimism is returning to Canadian real estate, but it must be earned," said Lee-Anne Kovacs, partner and national real estate leader at PwC Canada.
"We are seeing clearer signs that the market is turning a corner, with opportunities emerging across asset classes and regions. The organizations best positioned for the next cycle will be those that remain selective, move with conviction and address the constraints standing between improving conditions and real opportunity."
Senior housing, retail and industrial attract investor interest
Senior housing is benefiting from growing demand as Canada's population ages. The oldest baby boomers turned 80 in 2026, and Cushman & Wakefield estimates the country will need nearly 200,000 additional senior housing rental units over the next decade.
The sector also presents operational challenges, including staffing, service delivery, regulatory requirements and day-to-day management. The report identifies these demands as important considerations for investors evaluating the opportunity.
Retail is also attracting renewed interest after years of concern about the impact of e-commerce on physical stores. Limited new supply and renewed tenant demand have broadened investor interest beyond necessity-based retail and grocery-anchored properties.
Industrial real estate remains an established investment category, although the report points to more targeted opportunities. Small- and mid-bay properties are drawing particular interest, while larger facilities can carry greater risk when they depend on a single major tenant.
Data centres, health-care-related properties and increased defence investment are also creating potential growth opportunities where real estate intersects with infrastructure. An Oxford Economics forecast prepared for PwC projects Canada will require US$4.7 trillion in infrastructure investment by 2050.
Data centres are expected to account for a significant part of that development, with construction activity projected to peak in 2029. Access to power is becoming an increasingly important factor in determining where projects can proceed.
Calgary, Toronto and Edmonton lead regional outlook
The report finds that Canada's real estate markets are moving through different cycles, with conditions varying significantly by region and property type.
Calgary ranks first among the markets to watch for 2027, with real gross domestic product growth forecast at 3.4 per cent, according to Signal49. Interviewees cited renewed interest in the city and an economy they described as more diversified than in previous cycles.
Edmonton's real GDP growth is forecast to accelerate to three per cent in 2027, according to Signal49. Its industrial market remains a relative strength, particularly for small- and mid-bay properties.
Toronto illustrates the differences within a single metropolitan market. Pre-construction condominium sales fell 80 per cent year over year in the second quarter of 2026, while completed developer-held inventory reached a record 5,001 units, according to Urbanation.
At the same time, higher-quality downtown office and industrial properties are showing strength. CBRE reported downtown Class AAA office vacancy of 2.6 per cent in the second quarter, while Colliers reported Toronto's industrial vacancy rate was 2.2 per cent, the lowest in Canada.
"The GTA's real estate market is moving at different speeds," said Richard Joy, executive director of the Urban Land Institute in Toronto.
"Industrial and premium office show signs of recovery, while condominiums remain challenged. Purpose-built rental is supporting construction despite difficult project economics. Long-term investment opportunities remain, but realizing them requires patient capital and sustained housing delivery to prevent today's slowdown from creating future supply gaps and renewed pressure on housing affordability."
Elsewhere, Ottawa faces pressure from federal spending cuts and a shrinking government office footprint, although its residential and industrial markets remain comparatively resilient. Industrial vacancy held at 2.5 per cent in the second quarter of 2026, according to Colliers.
Halifax recorded Canada's highest year-over-year in-place rent growth, at 5.7 per cent in the second quarter, according to Yardi, despite moderating economic and population growth.
In Montreal, private funds are buying unsold condominium units at discounted prices and operating them as rentals as the residential market adjusts to new supply. Vancouver continues to face challenges for new development, although its downtown office market has shown relative strength, with a vacancy rate of 12.2 per cent in the second quarter, according to CBRE.
Quebec City had approximately 1.3 million square feet of industrial space under construction in the second quarter of 2026, with data centres accounting for most of the activity, according to Colliers.
Equity financing remains a constraint
The report says capital availability is improving, but financing conditions continue to favour established sponsors, income-producing properties and projects lenders consider highly bankable.
Debt remains available, but equity has emerged as a key constraint for borrowers preparing for a refinancing wave in 2027. Preferred equity and mezzanine debt are increasingly being used to bridge the gap between senior debt and common equity.
The report concludes that investors will need to be selective as they assess opportunities, rather than assume improving market conditions will benefit all property types and regions equally.
Artificial intelligence was identified by survey respondents as the industry's top disruptor, adding another consideration for real estate companies as they assess how to operate their assets.
The full Emerging Trends in Real Estate 2027 report is available through PwC Canada's website.