Recent immigration data, which saw the Canadian population increase by over a million people according to Statistics Canada last year suggest a continuation of the upward trend in commercial real estate and the importance of those assets in the portfolio planning process of investors. This is significant news and will have several implications for the commercial real estate market.

The fact that 96% of this population growth is due to international immigration is an important factor to consider. Economic migration has always been the largest category of immigration, and these newcomers are typically educated, younger, well-financed, and fluent in English and/or French.

This is a positive trend for the commercial real estate market, as economic migrants help to create new business and investment opportunities, thereby sparking activity in various commercial asset classes, especially industrial, hospitality, and consumer-driven businesses.

Another important factor to consider is the potential benefits that smaller cities in Canada may experience due to this population growth. Many of these cities saw a boom during the COVID-19 pandemic, partly due to the onset of remote work and the worsening affordability of larger cities. The fastest-growing cities last year were Moncton and Halifax, but strong growth was also noted in other markets across Canada and the Quebec province. 

If affordability in major urban centers like Toronto, Vancouver, and Montreal continues to create challenges, we can expect many new immigrants to start settling in smaller communities, creating new investment opportunities to meet the needs of the growing populations.

Apartment buildings continue to be a robust asset class because everyone needs a place to live coupled with the lack of supply on the market. Industrial assets also remain strong given the rising demand for consumer products, including e-commerce, from large retailers and grocery stores. 

The jury is still out on bricks-and-mortar retail due to the growth of e-commerce although we’re starting to see fresh demand amid a resurgence in international and business travel and a strong consumption level. 

Lastly, the resurgence of tourism and hospitality following the pandemic is expected to be driven further by the country’s growing population. We can expect busier airports, livelier hotels, and growth across the retail industry. With more people spending disposable income and taking more trips, this trend is set to continue in the coming months and years.

Overall, recent population growth in Canada is a positive trend for the commercial real estate market, with various opportunities emerging for investors across multiple asset classes and markets. Economic migration and market demographic and economic development are all important factors to consider when investing in the commercial real estate market.