Improving sentiment across commercial real estate markets in the Southern Greater Golden Horseshoe has accelerated transaction activity, reinforcing demand for retail and to a lesser extent industrial asset classes, while strengthening the region’s long-term outlook.
Retail takes the lead
While demand for strip plaza and retail centres in the Southern Greater Golden Horseshoe has been on the upswing, inventory levels have remained exceptionally tight. As a result, the handful of properties that have come to market in 2026 have experienced strong competition. Year-to-date retail transactions volume totals 35 sales, representing approximately $81.5 million in dollar volume, with current cap rates averaging 6.3 per cent. Many owners of high-quality retail assets remain hesitant to sell, opting instead to hold through the remainder of market recovery.
National market continues to evolve
REMAX Canada’s national 2026 Commercial Real Estate Report examined first-quarter activity across 12 major Canadian markets and found that the commercial property market has continued to evolve with improved absorption, particularly in the office sector, where return-to-office mandates are supporting increased leasing activity in premium space. Industrial demand has remained durable nationwide, with inventory challenges persisting. Retail fundamentals have continued to outperform expectations, supported by population growth and infrastructure investment, reinforcing long-term demand. While capital deployment has been measured in most markets analyzed, improving financial conditions have prompted renewed interest in well-located, income-producing assets.
Over the past 12 months, total retail sales volumes in the Southern Greater Golden Horseshoe exceeded $800 million, according to CoStar Retail Data for the Southern Greater Golden Horseshoe, underscoring a resilient and upward-trending market. Performance was supported by several high-profile acquisitions, including the $416-million sale of Hamilton’s Limeridge Mall in June 2025 to Primaris REIT, as well as a six-property retail portfolio in St. Catharines, acquired by a private investor for $140 million.
With fewer retail projects coming to market, competition for well-located properties has continued to grow. Year-to-date overall retail vacancy rates now hover at 1.8 per cent, placing upward pressure on lease rates, now approaching $25.00 per sq. ft., according to CoStar.
Industrial investment robust, although the current oversupply has placed nominal downward pressure on lease rates
In 2021, vacancy rates bottomed out at just below one per cent for overall industrial product in the Southern Greater Golden Horseshoe, sparking a wave of new construction activity. Square footage available at the time was just under one million square feet, according to CoStar. Fast-forward four years and newly completed product has been delivered to market, bringing the total available space to almost 3.9 million sq. ft., with vacancy rates increasing to 4.5 per cent.
Despite the temporary oversupply, industrial investment activity has remained robust. In the past 12 months, 85 properties have traded, achieving an average cap rate of 5.8 per cent. Although geopolitical tensions and tariff-related concerns have introduced some uncertainty, fundamentals have remained solid. REITs have been particularly active in the Hamilton and Brantford markets, in large part due to the city’s multi-modal transportation networks including the Hamilton International Airport and the Port of Hamilton.
Suburban office takes flight, while downtown office struggles
While downtown office space has continued to struggle, the suburban office has been alive and well as a growing number of businesses have relocated to secondary and tertiary locations, where demand for office space has tightened considerably. Areas such as Ancaster have experienced limited availability, driven by attractive lease rates and ample parking, all while maintaining competitive rental levels.
As lease rates continue to rise in these sought-after suburban communities, development activity is expected to resume, further reshaping regional office dynamics.
Multi-unit residential remains subdued
Activity in the multi-unit residential segment has softened, with rising borrowing costs and construction expenses continuing to weigh on both new development and transaction activity. Underlying demand fundamentals have remained intact, supported by population growth and relative affordability, but projects have remained on hold as developers reassess feasibility. Hamilton’s population, now nearing 900,000, has increased by 5.5 per cent since 2021, according to Statistics Canada: Population estimates July 1, 2025 for Census Metropolitan Areas and Census Agglomerations. The Niagara Region has experienced even stronger growth in the four-year period, with the number of residents rising almost 12 per cent to just over 500,000. Despite an increasing population base, investors have approached the segment more cautiously, waiting for clearer signals on interest rates and cost stabilization.
Evolving strategies reshape investment and occupancy patterns
A notable shift has been underway in the way businesses and investors approach real estate across the region. An increasing number of users have been purchasing their own premises, seeking greater control over occupancy costs and long-term value. At the same time, sale-leaseback transactions have been gaining traction, particularly among businesses looking to unlock capital while maintaining operational continuity. In some cases, companies have also been downsizing or relocating to more efficient footprints to improve overall yields.
Investor appetite has also evolved. New entrants and smaller-scale investment groups have been targeting income-producing retail assets, actively seeking product anchored by medical and dental tenancies. These properties offer long-term stability, often underpinned by extended lease structures, and can be enhanced by including pharmacy tenants with 20-year terms and multiple renewal options. This shift reflects a broader move toward needs-based assets that provide stable cash flow in a more uncertain economic environment.
AI-driven innovation takes shape throughout the Southern Greater Golden Horseshoe
While still in its early stages, AI-driven infrastructure and innovation have begun to take shape across the Hamilton–Niagara corridor. In Hamilton, McMaster University has advanced plans for a potential data centre and AI innovation hub at McMaster Innovation Park, intended to support research, enterprise collaboration and sovereign Canadian data capacity. At the same time, mounting demand for AI across Ontario has triggered significant grid connection requests, estimated in the thousands of megawatts, prompting governments to prioritize data centre development as part of broader economic strategy. While Niagara has yet to secure a large-scale AI infrastructure project, its access to hydroelectric power, cross-border connectivity and lower-cost industrial land have positioned it as a logical spillover market, as capacity constraints intensify across the Greater Toronto–Hamilton Area.
Renewed optimism has begun to take hold across the Hamilton–Niagara corridor, as improving clarity around economic conditions and the early emergence of AI-driven demand tied to data infrastructure and healthcare have prompted investors and owners to reassess their positions. While caution defined much of the past year, the reality is that capital cannot remain on the sidelines indefinitely. Increasingly, stakeholders have been looking at how to generate income, unlock additional value and put under-utilized land and assets to more productive use, whether through intensification, adaptive reuse or alignment with emerging sectors such as AI and advanced health sciences. As momentum builds, this shift in mindset is expected to support more consistent activity through 2026, laying the groundwork for stronger, more diversified growth into 2027.
