Western Canada sees mixed financing climate for commercial real estate
Lenders like necessity retail, distribution facilities, next-gen offices
Jami Makan Aug 5, 2026
The lending environment for commercial real estate in Western Canada is bifurcating, with some property types seeing more capital and others experiencing a reset or recession, experts told Western Investor.
“There’s capital out there and the situation has certainly improved, but I would say it’s a lot more selective than it used to be,” said Jordan Carlson, president of the Vancouver chapter of the Commercial Real Estate Development Association, formerly NAIOP.
“That’s a reflection of a bifurcation in the markets among asset classes, so certain things are doing very well and others aren’t,” he said.
The economy has gotten through a period of high inflation and interest rates, but that created dislocation in capital markets and investor allocations, said Carlson, also executive vice-president with Anthem Properties Group Ltd.
“They allocate a certain amount to this asset class and [that] asset class, but because those valuations got screwed up, it meant that their allocations were off, and so it essentially created a reset in the capital markets,” he said.
Today, there is plenty of institutional equity capital for the right commercial projects and properties, and debt is readily available for the right groups, particularly borrowers with a covenant and a track record, he said.
“Execution is really big with lenders these days,” he said.
Banks remain well capitalized but are more selective, focusing on landlords with strong covenants in place, good balance sheets and assets with steady cash flow, said Carey Buntain, principal with Avison Young.
There’s a healthy appetite right now for grocery-anchored shopping centres, large-bay industrial and well-located, core office, whereas capital is scarce for land, he said.
“Everybody’s land bank is full, and if it’s not full, they’re nervous about delivering on the projected revenues they would need to justify the land pricing,” Buntain said.
Both institutions and private high-net-worth offices are deploying capital selectively toward income-producing assets, he said.
Multi-family investors are focused on capital preservation, said David Venance, executive vice-president with Cushman & Wakefield.
“The last two to three years, I would define the market as being in a capital recession,” he said.
“Investors are a lot more defensive with their capital stack, their equity, and so if they’re going to deploy capital into an income-producing asset, they would like to see a higher loan amount or a higher loan-to-value.”
Five years ago, loan-to-value in transactions on vintage legacy assets was typically around 55 to 65 per cent, Venance said. Today, the loan-to-value is going to be 70 to 85 per cent, and new purpose-built rental projects financed through the Canada Mortgage and Housing Corp.’s MLI Select program can go as high as 90 per cent, he said.
“The loan-to-value demand, I would say, has come up 10 to 20 per cent on most deals,” he said.
Experts told Western Investor they are watching unsold condo inventory, rising insolvencies and receiverships, immigration policy and tariffs. Interest rates are another biggie.
“We’ve been grappling with higher interest rates than we expected for years now, and it always seems that they’re just about to go down and just about to provide us some relief – and then NAFTA and then Iran and then something happens,” said Adam Jacobs, head of research with Colliers Canada.
The lending environment has nonetheless improved, he said. A June decision by the Office of the Superintendent of Financial Institutions to lower banks’ capital buffers was effectively the equivalent of a small rate cut, he said.
Lender selectivity is not just about asset classes, Jacobs said. It can also be about geography, with B.C. boasting higher rents and lower vacancies and Alberta having resource projects and favourable demographics.
“It’s not just about industrial or office, but where is it and how much longer is on the lease and how much vacancy is there and how does the submarket look and how does the job market look in this area?” he said. “I think people are picking and choosing quite a bit more, and it’s a little less maybe broad strokes of, ‘We like this asset class, we don’t like that asset class.’”
www.westerninvestor.com/british-columbia/western-canada-sees-mixed-financing-climate-for-commercial-real-estate-12600751
