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17 Commercial Real Estate Trends to Watch in 2024

Hero Image 17 CRE Trends V2
For real estate observers, the past two years have been dominated by discussions on inflation, and the interest rate hikes that went along with it. As Canada experienced unprecedented rate increases, borrowing costs were a hot topic, begging the questions: When will rate hikes end? How high can interest rates go? Is inflation getting worse or better?

But as inflation recedes, and with no rate hikes for the past six months, we turn our attention to other areas. The post-pandemic landscape has brought about a range of drastic changes: downtowns grappling with a slow return-to-office, retailers dealing with evolving consumer expectations, developers facing high costs and challenging approval timelines, and more.

While interest rates are still a significant issue, we see other topics coming to the forefront in 2024: the possibility of a recession, a reckoning for tech and coworking, and potentially big political shifts affecting immigration and affordable housing.


  • Concern over rising government debt. RBC economist and Colliers podcast guest Claire Fan recently highlighted risks to Canada's AAA credit rating, a topic not even previously discussed. The risks largely revolve around large government expenses, weakening GDP and high private debt levels. While Canada’s economy remains top-rated, the recent increase in debt (both public and private) is quite significant. So far, we haven’t seen downgrades or currency risk, but we may see pullbacks in government spending and private lending in 2024.

  • Job market stress. For years, the job market has defied predictions of a downturn, with unemployment well below pre-COVID levels. That changed in the last few months of 2023, with unemployment rising and major employers like TD bank announcing layoffs. As employers grapple with a complex situation of continued inflation and high borrowing costs, we may see further pullbacks. At the same time, current unemployment levels look downright optimistic compared to earlier eras: consider the 11% national unemployment rate in 1991, and our situation doesn’t look as bleak.

  • 117 CRE Trends Unemployment Relative to September 2019

  • Recovery in public REITs? Real Estate Investment Trusts (REITs) are public vehicles for investment in commercial real estate. Most suffered losses in 2023, as these funds tend to have high levels of debt and be sensitive to interest rates increases. The story is similar for the TSX stalwarts such as Dream, Allied and Artis: peaking in value in the first half of 2022, then declining sharply as rate hikes set in. However, all of these pay attractive yields (5-10%) and trended upward in Q4 2023. Public markets can overreact to bad news, and REITs may be poised for a rebound in a more stable investment environment.

    217 CRE Trends TSX REIT Performane 2Year vs 3Month Returns

  • The end of the return-to-office debate. March 2024 will mark the beginning of the fifth year of work since the COVID pandemic. Across the country, we’re seeing a widespread acceptance of hybrid work across a range of employers. While the details of “hybrid” vary a lot, we haven’t seen full return-to-office mandates that were predicted when COVID restrictions ended. At the same time, the fully remote future discussed in 2020 has evaporated, even at the vanguard of tech employers. Hybrid work is the new normal, which creates plenty of new challenges for asset owners, occupiers, brokers and developers.

  • Tech bounces back? 2023 was a down year for tech funding and jobs, as detailed in Colliers' recent Canada tech occupier guide. Just as rising rates impacted real estate investment, they also weighed on the venture capital market. Will we see mergers or acquisitions by global players like Meta and Google? Did tech truly overextend itself during the pandemic?

    317 CRE Trends Change in Venture Capital Funding 2022 to 2023

  • Coworking shakes off the WeWork bad news and thrives. WeWork's failure ($50B company to be bankrupt in five years) dampened the previously animated coworking discussion in 2023. But ultimately, such failure was a reflection of the company's leadership versus coworking as a business. The proposition of coworking is simple: pay more for a shorter lease, with more flexibility than most landlords offer. In an era of disruption in work, this is an attractive proposition for many tenants. More stable coworking operators are expanding beyond the downtown core into suburbs and secondary markets, suggesting continued strength for this leasing model.

Development and Industrial

  • Office under construction continues to drop. Here's an easy prediction: fewer and fewer office buildings will be under construction in Canada. The number has been dropping for years due to a combination of hybrid work, downtown gridlock and high land prices, along with an abundance of new supply. But with the current interest rate environment and lender aversion to long-term projects, it seems a certainty that new development will drop close to zero in 2024.

  • 417 CRE Trends Office Under Construction 2010Present

  • Rising industrial availability. After a decade, it's finally happening – industrial availability rates are rising from near-zero levels. For now, we still have record levels of warehouse construction, but we'll see if a slightly softer market dampens the interest of developers. It’s still a “landlord’s market” for industrial, but the years-long trend of rising rents and falling availability may be turning around as the economy softens in 2024.

  • 517 CRE Trends GTA Industrial Availabilty Rate 20172023

  • Can office conversions become a reality? Everywhere you look, there's another article on an "obvious" solution to our housing shortage: convert existing office buildings to apartments. If only it were so simple. Successful conversions are highly concentrated in one market, Calgary. Not only does this market have the highest, most prolonged downtown vacancy in the country, it has also taken the unprecedented step of paying landlords to convert: $75 per square foot, considerably more than the going rate for older downtown buildings. Can conversion – much discussed and debated – become a reality across the country? Or are the financial, engineering and planning requirements far too daunting to make it a viable solution, except on the margins?


  • Housing development at the forefront. Recent announcements show increased federal and provincial attention to the housing crisis. Efforts include the removal of GST from rental development and pre-approved housing designs to speed up construction. At the same time, the outgoing head of Canada Mortgage and Housing Corporation (CMHC) said on the record there is "no plan" to address the millions of units needed for affordability. The magnitude of the housing crisis is so great that it’s fair to question whether these incremental changes will have a real impact in 2024.

  • Airbnb and short-term rentals in the crosshairs. Sentiment towards Airbnb has turned negative, and the federal government is making noise about restricting short-term rentals. The housing crisis in Canada has highlighted Airbnb’s large presence in both urban areas and vacation destinations, and critics have noted the majority operate without the necessary licenses. Public sentiment has turned against Airbnb, both in terms of its role in the housing shortage, and the rapidly escalating prices and fees on the platform. Will we see government intervention, or just people “voting with their feet” for other options?

  • The city battles itself. In the push for affordable housing, sometimes the city's opponent isn't the bond market, the province or developers: it's the city itself, as demonstrated by this story about a public affordable housing development in Toronto. While the city's community housing tries to develop derelict townhouses, the city's heritage department obstructs the development. How or whether this situation will be resolved isn't clear yet. While cities have many legitimate obstacles to addressing housing, we sometimes see them obstructing themselves.


Travel, hospitality, and tourism

  • Strong appeal for low-cost attractions. Colliers’ internal foot traffic tool indicates strong growth for low-cost attractions like national and provincial parks, historic sites and libraries. "Big ticket" outings like casinos, concert venues and movies are trending downward. When the ongoing pressure from inflation meets the post-pandemic desire for experiences, we expect to see continued strength in affordable attractions.

    717 CRE Trends Yearly Change in Visitor Volume October 2023 vs 2022

  • Tourism and travel (finally) levels off. One area that seems immune to inflation cutbacks is air travel and hotels. Revenue per room is at record-high levels, and some popular markets like Vancouver are now seeing hotel occupancy above pre-COVID levels. However, job losses and the financial pinch of higher interest rates may dampen the hospitality sector in 2024.

    817 CRE Trends Average Daily Rate Canada Hotels

  • Selective retail expansions. As the hangover from lockdown and the pandemic recedes, retailers of all stripes will look to expand in the Canadian market. While the closure of anchors like Nordstrom dominated the news, we've heard expansion announcements from Uniqlo, Mountain Warehouse, Dollarama, IKEA, Taco Bell, Ralph Lauren and Columbus Café.

  • Informal and youth-oriented fashion outperforms. The world has become more casual post-pandemic. Looking at retailer foot traffic, we see workwear staples Brooks Brothers, Harry Rosen and Holt Renfrew declining. Brands targeting younger consumers and/or casual wear are some of the biggest gainers: American Eagle, Ardene, la Vie en Rose and Aritzia all recorded double-digit growth in foot traffic this year.

    917 CRE Trends Change in Share of Apparel Market October 2022  October 2023

Pour plus d’informations, veuillez contacter:

Adam Jacobs

Head of Research | Canada

Toronto Downtown

Colliers Canada's head of research, leading a cross-country team of 20 mapping, analytics and research professionals. Formerly head of Canada research at Cushman Wakefield and Director of Analytics at Oxford Properties. Featured in mainstream publications such as the Toronto Star, industry publications and podcasts. Specializing in the big picture and the fundamentals driving real estate - demographics, the macro environment and the global economy. 

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