Real Insights | Q2 2025: Tariffs, trends & transformation in Western Canada

Real Insights reports dive into the three key forces shaping the market — Economics, Investment Activity, and Key Trends. This quarter, the focus shifts to Western Canada, with customized insights aligned to the Calgary, Edmonton, and Vancouver forums.

Catch the highlights in our 2-minute video with a quick overview of the report:

Read on for more details in the full report:

ECONOMICS

Both Alberta and British Columbia are anticipating economic losses as a result of U.S. President Trump’s potential and actual imposition of on-again, off-again tariffs.

The B.C. government estimates cumulative losses between now and 2029 could be as high as $43 billion, with a 1.2% GDP decline in the second quarter of 2025 alone and 124,000 job losses by 2028. The upside for B.C. is that its export markets are already significantly more diversified than those of most other Canadian provinces, with stronger ties to Asian markets. U.S. exports make up only 8% of its exports, while 45% go to non-U.S. trading partners.

In Alberta, the province anticipates GDP growth of only 1.8% this year and 1.7% in 2026 versus previous projections of 3% annual GDP growth, and a provincial budget deficit of $5.2 billion versus a previous projected $5.8 billion surplus. The deficit will result from both decreased oil revenues and significantly lower exports to the U.S., particularly beef. Lumber and steel tariffs will increase material construction costs by 10-15%.

With 10% energy tariffs, Alberta’s economy is somewhat protected. While crude oil prices are softening in anticipation of slower global demand, the province plans to increase output and expand its market access to non-U.S. buyers.

The federal government’s promise to eliminate interprovincial trade barriers and fast-track major infrastructure projects to turn Canada into an energy superpower should have a positive effect on GDP growth.

Consumer spending is expected to decline as tariffs and continuing inflation force prices higher. The Alberta government’s personal income tax cut will mitigate somewhat, and in B.C. declining personal debt levels, rising incomes, falling interest rates, and spending restraint will help.

Economists are forecasting slower Bank of Canada interest rate reductions and that it will be the end of the year before the rate reaches 2.25%. Canada will experience a mild recession as we reduce our economic dependence on the U.S.

INVESTMENT

CMHC policy changes announced at the end of February mean bundled multi-title properties will no longer be eligible for financing under the Mortgage Loan Insurance Select (MLI Select) program. Financing applications must now include at least five rental units within the same building and on the same lot. This should force a shift to developing larger multi-unit residential.

In Edmonton, the industrial market, led by the Northwest, has seen 18 consecutive growth quarters. Multi-family transactions continue to demonstrate sustained investor confidence.

In Calgary, investors are focused on multi-family, data centres, and sustainable developments, making strategic investments in emerging sectors and adaptive reuse projects to capitalize on evolving market dynamics. Retail continues to thrive, with essential goods and services trending, including community shopping centres and big-box stores anchored by grocery tenants. The industrial market in Calgary has stabilized, with absorption at 10-year-average levels. Of the 2 million square feet under construction, a significant portion is already leased or designated build-to-suit. More than 10,000 new rental units were added to Calgary’s supply in 2024. There are nearly 7,000 new units under construction and almost 23,000 in the development pipeline.

Several office developments in Metro Vancouver have been put on hold or postponed due to rising construction costs and tariff uncertainties. The office availability rate is now 13.4%. As companies adjust to hybrid work models, older office buildings are undergoing adaptive reuse to residential. Sustained demand for logistics and distribution centres continues, with 4.6 million square feet of new industrial supply under construction.

Real estate development trusts (REDTs) are increasingly being used to secure financing in Metro Vancouver. Two examples are Anthem Properties’ mixed-use development at Metrotown in Burnaby and an education housing project in Surrey organized by Pure Multi-Family Group. The Metrotown project will include condos, market and non-market rental units, hotel suites, and retail. It secured $82 million in REDT financing. Pure Group is partnering with Global Education Communities Corp. to develop a $330 million, 49-storey mixed-used tower including retail, schools, and market rental suites next to a Simon Fraser University campus and the SkyTrain.

KEY TRENDS

Adaptive reuse and development shifts are one of the key trends in the largest Western Canadian CMAs. With more than 2 million square feet of vacant downtown Vancouver office space available in each of the last four years, existing office space like Smithe House and 1111 West Hastings will be converted to hotels, and new office supply such as False Creek Station and Burnaby’s Gilmore Place Phase Two are now being proposed for residential rather than office use.

Calgary's Downtown Development Incentive Program facilitated the conversion of underutilized office spaces into residential units. More recently, the University of Calgary announced that its School of Architecture, Planning and Landscape will relocate to Calgary’s downtown and occupy 180,000 square feet in the Nexen Building on Seventh Ave. SW, which has been virtually empty for six years. U of C hopes to move into the new space, which is next to a C-train station, by January 2026. The 1,200-member student body will help to revitalize the area by supplying not only daytime occupants, but also increasing demand for retail in the area, including computer, art supply, and food service outlets.

Edmonton now has the country’s highest population growth, as well as the highest personal income per capita in the major CMAs. Consumers are returning to brick-and-mortar after the pandemic, and as a result, retail vacancy rates in Edmonton are on the decline, especially in suburban areas. Although big box and community-centred retail continues to be developed, there is a shift towards more urban, mixed-use concepts. Edmonton’s Downtown Action Plan includes development of an Arts District, the ICE District, and an Education District, as well as doubling the downtown residential population to 24,000 within 10 years. Edmonton has recently approved a new public spaces bylaw that includes bans on spitting, using drugs, panhandling, loitering in bus shelters, putting up a tent or other shelter, and displaying or using weapons to create a safer downtown environment.