Return-to-office mandates could accelerate market momentum for real estate investments in 2026, says Michael Tsourounis, managing partner and chief investment officer at Hazelview Investments.
“You’re starting to see huge velocity in the leasing sector in office. You’re starting to see a lot of space getting absorbed [and] vacancy rates [are] now starting to come down from where they peaked out.”
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In the last few years, Canadian real estate investments have been marked by significant headwinds, particularly in residential opportunities. These headwinds haven’t been helped by weaking economic growth in Canada and a pullback strategy from the Canadian federal government around immigration, he adds.
Tsourounis expects the institutional investor base to continue depending on real estate as a source of lower volatility assets with long-term return profiles, uncorrelated to public markets. However, he admits there’s been a pause period in how investors determine real estate allocations best fit their portfolios. Looking ahead he anticipates investors will review overexposed positions to create a more balanced approach from investors.
“I don’t know if it’s as much of a huge increase in allocation to real estate, . . . starting to have some liquidity, trying to turn over strategies that they had before, recycling capital into new ideas and new opportunities going forward.”
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A report from PricewaterhouseCoopers noted investors are increasingly looking beyond traditional asset classes in Canadian real estate and are being served by private capital opportunities to fund student housing or medical offices.
Deal activity in Canadian real estate is moving beyond distress-driven transactions to include private real estate investment trusts, family offices, infrastructure funds and private debt. The shift represents a market willing to adapt to uncertainty with agility and innovation, the report said.
The progress of real estate investments is directly tied to the entire economic path of Canada in 2026, says Tsourounis. “We need economic growth in Canada in order to support an outlook and a view that is constructive to doing business.”