- Morguard’s (TSX:MRC) 2026 outlook reports gradual stabilization across Canadian real estate, including improved office conditions, healthy industrial fundamentals, and firmer multi‑suite residential demand
- Despite slower economic growth linked to U.S. trade tensions, high‑quality commercial assets continued attracting capital, with investment expected to rise in 2026 as borrowing conditions ease
- Tight retail markets, stable industrial demand, and strengthening rental housing fundamentals are forecast to support steady performance across major property sectors into 2026
- Morguard stock (TSX:MRC) last traded at C$118.15
Morguard (TSX:MRC) has released its 2026 Canadian Economic Outlook and Market Fundamentals Report, providing a comprehensive assessment of 2025 market performance and forecasting key trends expected to shape Canada’s commercial real estate landscape in the year ahead.
Now in its 28th year, the annual report points to broad signs of stabilization across the multi-suite residential, office, industrial, and retail property sectors.
Despite an economic environment softened by U.S. trade tensions and slower domestic growth in 2025, the report indicates that real estate markets are showing resilience and early signs of renewed investor engagement.
“Canada’s economy shifted into a lower gear in early 2025 as U.S. tariffs and global trade tensions weighed on growth and business confidence,” Angela Sahi, Morguard’s president and CEO said in a news release. “Even in this slow-growth environment, high-quality real estate has continued to demonstrate resilience, supported by stable income performance and a steady flow of private capital into well-located, stabilized assets.”
Economic backdrop: Slow growth, rising stability
The Canadian economy entered 2025 under pressure as U.S. tariffs and broader global trade frictions weighed on growth, employment, and business confidence. Morguard notes that these headwinds pushed the economy into a “lower gear” during the year.
Even so, the organization reports that high-quality commercial real estate assets remained well-supported by private and institutional capital, reflecting their stable income characteristics and long-term performance potential. Looking ahead, Morguard projects modest economic expansion in 2026 as trade conditions gradually improve and financial markets stabilize.
Broader third-party economic outlooks mirror this view: Scotiabank Economics also forecasts slower but positive Canadian growth of roughly 1.5 per cent in 2026, emphasizing ongoing uncertainty but improved fiscal support.
Multi-suite residential: Conditions stabilizing after softening in 2025
Morguard reports that Canada’s multi-suite residential rental market softened in late 2024 and throughout 2025 due to weaker rental demand and a notable increase in new supply. Despite this, investor sentiment toward the asset class remained firm, driven by confidence in the sector’s income reliability and its strong medium‑ to long‑term fundamentals.
Looking ahead, the report anticipates gradual stabilization in rental market conditions throughout 2026. Modestly stronger economic activity and improving youth employment are expected to support firmer rental demand in the second half of the year. As conditions strengthen, Morguard forecasts stable vacancy rates, reduced landlord incentives, and leveling rent growth, with balanced market conditions expected by 2027.
Office market: Gradual improvement as occupancy rises
The report highlights an improved outlook in Canada’s office sector, supported by return‑to‑office mandates from major financial institutions and government departments. Increased physical occupancy has driven renewed demand for high-quality, amenity-rich workspaces.
Investors are expected to remain selective, focusing on trophy buildings, Class A assets, and value-add or conversion opportunities, particularly in urban cores where tenant preferences have shifted toward efficient, modern space offerings.
Industrial market: Healthy fundamentals and steady demand
Canada’s industrial real estate sector continued to perform well through 2025, with availability rising partly due to an uptick in new supply. Even so, industrial leasing fundamentals remained relatively healthy, and strong demand supported stable investment activity—particularly in logistics and warehouse assets.
For 2026, Morguard maintains a favourable outlook for the sector, citing stable demand, moderating availability, and solid income‑driven performance as key themes expected to continue attracting investor interest.
Retail market: Tight conditions and strong tenant demand
The report notes that high-quality retail space remained in short supply across many of Canada’s top-performing retail corridors and shopping districts. By the end of 2024 and into 2025, retail vacancy rates were generally healthy, especially in community and neighbourhood formats.
Solid retailer demand allowed landlords to achieve strong rents, especially for well-located, high‑quality space. Morguard expects these supply constraints to persist through 2026, contributing to tight conditions and resilient rental and income performance across the sector.
Investment trends: Increasing activity expected in 2026
Despite slower economic growth, investment capital continued to flow consistently into commercial real estate throughout 2025. Investors displayed particular interest in stabilized retail, industrial, and multi-suite residential assets offering durable income streams.
In 2026, Morguard anticipates an increase in investment activity as borrowing costs ease, lender appetite improves, and bid-ask spreads narrow—key factors expected to bring more buyers and sellers back into alignment.
Outlook for 2026: Renewed momentum across sectors
According to Morguard’s report, the year ahead points to a cautiously optimistic environment across Canada’s commercial property landscape:
- Multi-suite residential demand is expected to firm as employment improves and market conditions rebalance.
- Industrial investment confidence remains strong, supported by healthy fundamentals and improved lending conditions.
- Retail markets are forecast to remain tight, with high-quality space in especially strong demand from expanding retailers.
- Economic growth is projected to be modest but positive as trade tensions ease and investment activity strengthens.
Room for rent
Morguard’s 2026 outlook suggests that while the Canadian economy faces a slow-growth environment, underlying real estate fundamentals—particularly in industrial, retail, and multi-suite residential sectors—remain resilient. As financial conditions improve in the coming year, the report points to a gradual return of investor momentum, positioning Canada’s commercial property markets for steady, measured growth.
Read the full report here.
Real estate investment and management company, Morguard Corp. engages in property ownership, development, and investment advisory services in Canada and the United States.
Morguard stock (TSX:MRC) last traded at C$118.15 and has risen 6.43 per cent since this time last year.
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