Property values held fairly steady in the first quarter of 2025, while commercial real estate transaction volume dropped nearly 17 per cent from the comparable period in 2024. Newly released analysis from Altus Group reports about $8.5 billion in Q1 sales across the office, industrial, retail and multifamily sectors — a slowdown in momentum that’s largely attributed to uncertainty around the potential impact of tariffs.
“There is a bit of a pause in the market. Deals are still happening, but transaction activity is focused on core deals where people feel confident in going forward,” maintains Ray Wong, vice president, research and data analytics, with Altus Group.
Relative to the first three months of 2024, retail values were up 4 per cent this winter, while office values dropped by the same amount. Multifamily values nudged up a modest 1 per cent and industrial properties recorded a nominal 0.4 per cent improvement. That’s reflective of deals that closed last fall.
“That’s why the numbers are still robust,” Wong says. “We won’t see the real impact from investor hesitation in the market until the second or third quarter.”
Retail values are still recovering from the COVID-19 pandemic and remain about 9 per cent lower than they were five years ago. Now, the outlook on the sector is somewhat split. There are fears a recession would erode consumer spending in many retail categories, but investors continue to be interested in grocery-anchored properties, which are less abundant in the marketplace.
Meanwhile, industrial values have jumped by about 60 per cent since the pre-pandemic period, but the sector now faces tariff-related uncertainty in combination with rent softening due to a large influx of new supply. Office values are down 20 per cent since 2020, while multifamily values are up more than 12 per cent from five years ago.
Looking forward, Altus analysts point to some positive dynamics with interest rates now at lower levels and investors poised to deploy capital once some economic certainty returns. However, that will be contingent on avoiding a recession.
“It is a wait-and-see mindset right now,” hypothesizes Robert Santilli, director of valuation advisory with Altus Canada. “If this trade war is resolved, and there’s not too much damage done, then I think we resume the course of easing monetary policy. Interest rates come down, and deal activity increases from what we’ve seen in the last two years.”
