Real estate investors are expressing cautious optimism for the latter half of 2025, despite lingering headwinds that remain concerning for industry professionals.

According to a new study, the vast majority of Avison Young real estate professionals surveyed are convinced overall investment activity will stay the same (48 per cent) or improve (45 per cent) for the rest of this year.

“Very few of the respondents anticipate a decline in activity in the market. A lot of the uncertainty from the beginning of the year has dissipated slightly: things will not be as bad as maybe we were anticipating and there’s also some long-term fundamental trends that are not even related to tariffs,” said Marie-France Benoit, principal and director market intelligence Canada with Avison Young, who spoke with RENX.

“What we’re seeing is that people were ready to get back in the game.”

The survey was conducted online, and it included follow-up questions, between May 13 and May 26. It included responses from 150 Avison Young employees (brokers and project management professionals) across Canada.

After a pause, investment activity returns

While U.S. tariffs were heavily cited as a reason for pessimism, with 67 per cent of respondents saying their markets would suffer due to the extra costs, some uncertainty from earlier in the year may now be behind us.

“Almost all of the institutions were telling us that they’ve gotten through a lot of their issues with loans that had to come due, and all the things that were eating up their capital, and they were looking forward to getting back to investing in 2025,” said Mark Fieder, Avison Young principal and president for Canada, who also took part in the interview.

“What’s happening here is that we had a pause but we’re getting back to where we were going into the end of last year, when we had this optimism. I think that you’re going to see more activity toward the end of the year.”

The main reasons for a potential pause in investment activity, according to the survey, include tariffs and overall costs (34 per cent), feasibility (24 per cent) and risk (21 per cent).

In contrast, 88 per cent of respondents (44 per cent significantly; 44 per cent slightly) believed there will be an increased demand for investment in the final six months of 2025.

“If you look at the fundamentals of the market and the economy, it’s pretty solid. We have relatively low unemployment; we have relatively low interest rates, and construction costs are starting to come down. We know there’s some tariff concerns around materials but, overall, things are starting to come into balance,” Fieder observed.

CRE investment "solid across the board"

While U.S. tariffs continue to be a source of market apprehension, investment activity looks to improve in many sectors, he said.

“Going into the back half of last year, we see demand for industrial both on the occupier (and) the investor side. We see demand for retail on occupier and investor, and we see demand for multiresidential both on the occupier and the investor side.

"It’s solid right across the board in all six major markets in Canada and many of our sub-markets as well.”

What is giving some real estate professionals a great deal of confidence are efforts being made to transfer foreign investment and business ties away from the U.S. to other international markets.

“I also think that it’s becoming apparent to me and others, that the tariffs are not going to be as punitive as what we thought they would be,” Fieder said.

Infrastructure bill addresses major need

As well, new legislation in the form of Bill C-5 represents good news for the industry, according to Benoit.

“Infrastructure has been an issue for real estate, because of the aging infrastructure. The recent announcements to have speedier investment in infrastructure is good news because, good new leadership wants to address something that real estate has had to address as well.”

While companies increasingly are pushing employees to return to the office, after COVID and post-COVID downturns in office capacity, many commercial real estate professionals are being challenged to successfully place clients into appropriate office spaces.

This could boost that sector in the coming months.

“Workplace strategy will be brought to the table," Fieder said. "One of the things that’s happening right now, is some of our big institutions, including the banks, are bringing people back, return-to-office, and they’re making rules for three days, and in some cases, four days; some cases five days. They’re realizing they don’t have enough space and the space that they have may not satisfy their employees, meaning that some employees don’t want to come back into some environments."

Overall, investment demand remains strong for most asset classes, according to the survey.

“The multires remains one of investors’ favourites. There’s strong demand in food-anchored retail malls and also interest in specialty real estate, like data centres and self-storage,” Benoit concluded.