PwC Canada and the Urban Land Institute’s Emerging Trends in Real Estate (ETRE) 2026 Canadian report reveals a market in transition as companies reinvent business models to capture new sources of growth.
While affordability and housing supply dominate headlines, the report points to growth in purpose-built rental, grocery anchored retail and seniors’ housing, fueled by new sources of capital and faster cross industry partnerships.
“Canadian real estate is at a pivotal moment–policy momentum is building, and the sector’s ability to collaborate across industries is opening doors to new opportunities,” said Fred Cassano, Partner, National Real Estate Leader, PwC Canada. “Addressing the construction shortage is essential, as its impact ripples across every asset class, from housing to retail and industrial. By embracing new approaches and partnerships, we have a tremendous opportunity to build the spaces our communities need and unlock growth throughout the market.”
The report said grocery anchored/open-air retail continues to outperform.
“Sentiment toward the retail segment is largely optimistic, as evidenced by the sector’s relatively low NAV (Net Asset Value) discount. Several interviewees identified retail as a good bet, with landlords reporting strong tenant demand and rising rental rates,” said the report.
“One interviewee suggested that some vacancies would be welcomed, as it would give them a chance to reset rents at higher levels. Limited construction in recent years has likely contributed to this, putting space at a premium. Some interviewees even suggested they may be looking at building new retail developments. Others noted that with cap rates compressing, those looking at investing in the space will likely find themselves paying more than they hoped.”
The report said open-air retail is performing well: interviewees identified grocery-anchored developments in suburban locations as a best bet for 2026.
“Several suggested that there will always be a market for good-quality local retail, while others highlighted how mixed-use developments are a key strategy for bringing in customers—with the quality of the residential component bolstering the retail side and vice versa,” said the PwC report.
“Experiential retail is also attracting increasing attention. One interviewee highlighted the concept of “eatertainment”—the combination of food and beverage offerings with novel and sharable entertainment experiences—as an attractive opportunity because of its ability to create destination locations that then support other retail businesses nearby. Some of these experiential offerings are taking up spaces left by anchor tenant departures, helping to reinvigorate retail properties. Several owners are also looking at anchor tenant departures as an opportunity to redevelop larger spaces to unlock new value aligned with evolving consumer preferences.
“It’s important to note that the positive sentiment toward the retail segment isn’t universal. In addition to the loss of a major department store tenant this year, some interviewees said increased caution about the economy is causing more hesitation among companies considering long-term leases for large spaces, extending the time for property owners to find new occupiers.”
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