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The Canadian Real Estate Investor · July 29, 2025

Are Low Cap Rates The New Normal For Commercial Real Estate?

Cap Rates
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We look at cap rate reports from Colliers and CBRE and discuss whats happening in the commercial real estate world. 

  • National Market Overview: Canadian CRE remains stable (all-property cap rate: 6.67%) despite economic uncertainty; Bank of Canada cuts to 2.75% created favorable lending conditions.
  • Asset Class Performance: Industrial leads with compressing cap rates (6.16%); retail rebounds as "investor darling" (5-6% range); multifamily maintains lowest yields (mid-4%); office struggles with rising cap rates.
  • Regional Highlights: Toronto and Vancouver have lowest cap rates; Montreal faces highest office vacancy; Calgary industrial remains strong; Ottawa saw sharpest industrial cap rate drop (-75 basis points in Q1).

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