Atlantic Canada continues to stand out as a beacon of stability and opportunity amidst global economic uncertainties. As we move toward 2025, the region’s commercial real estate (CRE) sector is poised for growth across key areas, driven by resilience in retail, robust demand for industrial and multifamily spaces, and a gradually improving office market.
At the recent CBRE Atlantic Market Outlook event on November 12, CBRE Halifax Executive Vice President Bob Mussett addressed over 900 attendees, sharing his positive perspective on the region’s prospects. “Unlike other places, Atlantic Canada has managed to maintain much of the commercial real estate momentum that we had during the pandemic,” said Mussett. “We’re not immune to economic trends and deal-making will require creativity and patience, but we’re seeing a brighter path forward in 2025.”
Retail Resilience: A Competitive Landscape
Atlantic Canada’s retail sector has weathered economic headwinds admirably. Grocery-anchored retail properties remain in high demand, alongside enclosed retail centers that are attracting significant financing activity. With retail vacancies at record lows, competition among tenants for prime locations has intensified, driving rents and favoring landlords.
Both luxury and discount retailers continue to thrive, while mid-market retailers face challenges. Halifax, in particular, is attracting increased attention from luxury brands, bolstered by a growing and evolving demographic.
Industrial Development: Progress and Challenges
The industrial market, long constrained by a lack of supply, saw record-breaking new deliveries in 2024. However, high land costs and limited development-ready sites persist as challenges. Land values are reaching unprecedented levels, and rental rates are expected to continue climbing.
Despite these hurdles, ongoing construction projects and the adoption of advanced technologies like AI-driven property management signal a promising future. Modern industrial buildings with vertical expansion capabilities are becoming increasingly popular among tenants looking to maximize efficiency.
Multifamily Housing: Demand Outpaces Supply
Halifax’s multifamily housing sector remains under immense pressure. Record-low vacancy rates and robust rental growth highlight the ongoing supply-demand imbalance. While 2024 saw a surge in new multifamily starts, labor shortages, lengthy approval processes, and rising construction costs continue to hinder development.
The federal housing accelerator fund is expected to drive higher multifamily starts in 2025, especially for projects leveraging increased density allowances. However, developers are prioritizing pad-ready sites, with other land parcels facing diminished trading activity due to uncertainties.
Office Market: Signs of Revival
Halifax is outperforming national trends with declining office vacancy rates and positive absorption, driven by major developments like the Nova Centre and Queen’s Marque. Larger office-to-multifamily conversions are also reducing inventory, contributing to improved market conditions.
Suburban office assets are gaining traction, particularly those with government and healthcare tenants, while downtown markets remain more sluggish. The tech sector’s growth continues to fuel demand for office spaces, and investor interest in Class A assets is expected to strengthen further in 2025.
Looking Ahead
Atlantic Canada’s commercial real estate sector is navigating challenges with resilience and optimism. Retail, industrial, multifamily, and office markets each present unique opportunities for investors and developers willing to adapt to shifting dynamics. As 2025 approaches, the region’s CRE outlook remains robust, offering a compelling case for those seeking stability and growth in uncertain times.
