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In May 2023, Toronto City Council made a pivotal move by amending zoning laws and policies to encourage housing development. This change was part of the broader 2023 Housing Action Plan aimed at fostering inclusive, sustainable communities throughout the city. However, despite the green light for these projects, the real estate industry faces challenges, including high borrowing costs, slow municipal adoption, and a lack of knowledge on how to fully benefit from these changes. With interest rates finally beginning to drop, there’s renewed optimism, and a critical question arises: have we found the missing middle?

What is the “Missing Middle”?

The concept of the “missing middle” refers to a gap in housing types between high-rise condos and single-family homes. Multiplex development could be the key to filling this void. Unlike large-scale developments, multiplexes are smaller multi-unit properties that are constructed more quickly and efficiently. With new zoning regulations in place, these projects are gaining traction as an effective solution to Toronto’s housing shortage.

Advantages for Homeowners and Landlords

For homeowners, multiplex development offers an opportunity to maximize the use of their property. As property taxes and living costs rise, many homeowners are looking for ways to generate extra income. Building a multiplex, such as a triplex, can provide additional rental units, creating a steady revenue stream. Moreover, it opens up possibilities for intergenerational living, allowing families to build separate units for elderly parents or adult children, all while staying close to home.

The Developer’s Advantage

For developers, the shift towards multiplex projects offers a unique opportunity in a market that has seen condominium development slow down. With Canada facing a housing deficit projected to reach 658,000 units by 2030, smaller-scale developments like multiplexes are becoming more critical than ever. Toronto’s new policies allow these developments in residential neighborhoods, opening up new possibilities for developers. The speed of construction, supported by streamlined permitting processes, makes multiplexes an appealing option for developers looking for quicker returns on investment.

Lending and Investment Opportunities

While larger financial institutions are cautious about funding smaller projects, multiplex development presents an opening for alternative lenders to step in. These lenders can support mid-sized developers, helping bring necessary housing to market. For investors, multiplexes are becoming a more accessible option, offering an affordable alternative to high-risk condo investments. With favorable tax structures and shorter development timelines, multiplex properties are emerging as a compelling investment strategy for 2025.

Conclusion

Multiplex development offers a promising solution to Toronto’s housing crisis. With the right mix of small- to mid-sized developers, lenders, and investors, this type of housing could help bridge the gap between high-rise condos and single-family homes, solving part of the city’s pressing housing needs.

In today’s unpredictable commercial real estate landscape, Canadian investors are facing a range of challenges, from rising construction costs to shifting political dynamics. The CBRE Capital Lenders’ Forum, held on February 25^th in Toronto, brought together key players in the industry to discuss the effects of global tariffs, particularly those levied by the Trump Administration, and their potential impact on Canada’s real estate market. While panelists acknowledged the difficulty in predicting the outcome of these changes, they also highlighted several emerging opportunities for savvy investors.

The New Reality of Tariffs and Their Impact on Development Costs

Discussions focused on the uncertainty of how tariffs on U.S. imports, particularly construction materials, would affect the Canadian commercial real estate market. Many experts expressed concern that retaliatory tariffs from Canada could increase the cost of essential building materials, including steel, appliances, and HVAC systems. This could lead to a rise in development costs, especially in the residential sector. For developers, this could result in a 4% increase in overall development expenses, a figure that, while concerning, is not insurmountable.

However, industry leaders remained optimistic about Canada’s future in the real estate sector and focused on the importance of maintaining a pro-growth agenda in Canada, regardless of external factors like tariffs, highlighting the potential for internal reform to counteract some of the negative effects of global trade disruptions.

The Office Market: Repositioning and Reimagining Spaces

While many sectors of the real estate market are adapting to shifting economic conditions, the office market is also undergoing transformation. One notable success story is KingSett Capital’s repositioning of Scotia Plaza, a high-profile office tower in Toronto. With significant vacancies following Scotiabank’s relocation, KingSett and its partners invested heavily in the building’s renovation, transforming it into Canada’s first Zero Carbon Performance-certified office tower. The result? Full occupancy, with all of Scotia Plaza’s once-vacant office space now leased.

This success demonstrates the potential for investors to breathe new life into underperforming office assets through strategic repositioning and modernization. By focusing on sustainability, premium amenities, and high-quality service, investors can transform older office buildings into sought-after spaces for tenants, even in a challenging market.

Looking Ahead: A Bright Future for Canadian Real Estate

Despite the challenges presented by tariffs, rising construction costs, and geopolitical uncertainty, real estate investors in Canada remain optimistic about the long-term prospects of the market. While it’s crucial to stay informed and flexible, the Canadian market offers numerous opportunities for those willing to take a strategic approach. Whether through multifamily housing, affordable housing development, or repositioning office spaces, there is ample potential for growth.

In conclusion, Canada’s real estate sector may be navigating a period of uncertainty, but for those who take a long-term view and remain adaptable, the next decade could prove to be a lucrative one. For real estate investors, now is the time to act.

The Toronto office market is poised for significant growth in 2025, creating a unique opportunity for real estate investors. While vacancy rates are expected to remain high early in the year, industry experts predict a shift towards large lease deals and a flight to premium office spaces.

One of the most notable trends is the early lease renewals and expansions, as institutional employers regain confidence in the post-pandemic office landscape. For example, EY Canada recently renewed its lease at the EY Tower and expanded by 50,000 square feet. This deal, the largest of 2024 in Toronto, signals the beginning of a broader trend expected to gain momentum in 2025.

Experts predict that the office market will stabilize as the supply of premium spaces is gradually absorbed. The key to success for real estate investors lies in understanding the growing demand for high-quality office spaces in prime locations that are expected to outperform other properties. Companies are increasing their focus on modern amenities, sustainability, and flexible workspaces to provide a top-tier employee experience.

The EY Tower in downtown Toronto exemplifies this shift. Redeveloped into a 40-storey building with high-performance energy systems and luxurious amenities, it has remained at full occupancy. Its success highlights how well located, well-designed, and amenity-rich buildings are attracting long-term tenants. With demand for quality office space set to increase, investors with properties in desirable locations are likely to benefit.

While vacancy rates in downtown Toronto are still relatively high, the market is starting to stabilize. By the second half of 2025, leasing activity is expected to rise, driven by companies committing to longer-term leases after years of opting for flexibility. For investors, this means that the Toronto office market is heading toward healthier conditions, with more secure and predictable rental income streams.

In conclusion, 2025 presents a promising horizon for those investing in office space in the GTA. The ongoing flight to quality, combined with a stronger economic outlook and improved leasing conditions, positions investors for success. Now is the time to assess your portfolio and explore opportunities in Toronto’s premium office spaces.

A new townhome development in Ajax has been approved in just five weeks, drastically cutting down the typical approval timeline of up to 2 years. This quick approval will allow the 81-unit townhome project to be completed by 2026, rather than 2028, saving future homebuyers approximately $20,000 per unit.

The development, named “Time,” is being led by developer Marshall Homes and will feature three-storey stacked townhomes located near Rossland Road West and Harkins Drive. The site is just a short drive from the Ajax GO Station and close to the Greenwood Conservation Area, as well as nearby dining, shopping, and entertainment spots.

The land for this project has been vacant for decades. Previously, it was part of a development by Ajax Meadows, which fell into receivership after the original developers faced financial difficulties. Marshall Homes has stepped in with plans to build 81 units, a huge increase from the original proposal of just 27. The new homes will be priced in the low $600,000s, significantly more affordable than the area’s average price of $851,733 for attached homes.

The reason the approval process moved so quickly comes down to collaboration between the developers and the local government. After an initial meeting in August, Ajax’s Mayor Shaun Collier and planning staff worked with Marshall Homes to fast-track the zoning and development approvals. The project also faced little opposition from the community, with the only concern being potential traffic increases, which the developers are addressing with a traffic study.

One of the biggest benefits of this rapid approval is the cost savings. By bypassing unnecessary zoning requirements and reducing the approval timeline, the developers were able to avoid extra costs like interest fees, which would have been accumulated if the project had been delayed. As a result, future buyers will pay less for their homes, with an estimated $20,000 saved per unit.

Marshall Homes is now looking to build more projects in Ajax, hoping that this model of expedited approval can be replicated in other municipalities across Ontario. The success of the “Time” development shows that with the right planning and cooperation, new homes can be built faster and more affordably.

Mayor Collier emphasized the importance of projects like this, stating that they demonstrate how working together can lead to solutions for the housing shortage. By streamlining the approval process and removing unnecessary barriers, more homes can be built to meet the growing demand in Ajax and beyond.

Toronto has firmly established itself as one of the top cities for tech talent in North America, ranking 4th in a recent report by CBRE. Over the past five years, the city has experienced remarkable growth in tech jobs, with a particular boost from the growing demand for artificial intelligence (AI) skills. From 2018 to 2023, Toronto added nearly 96,000 tech jobs, marking a 44% increase. This surge has helped Toronto climb one spot in the rankings, now sitting just behind the San Francisco Bay Area, Seattle, and New York.

A major driver behind Toronto’s success is the increasing demand for AI expertise. AI skills are no longer exclusive to tech companies—businesses across all sectors, including finance, law, and manufacturing, are hiring tech talent to stay competitive. Colin Yasukochi, executive director at CBRE’s tech insights centre, highlighted that, for the first time in over a decade, more tech talent is being hired by non-tech companies than by traditional tech firms. This shift underscores how integral technology, and especially AI, has become across industries.

Toronto has also become a hub for AI research and development, attracting top talent from around the globe. Liz Nucci, CBRE’s senior vice president, explained that both local AI startups and major tech companies are expanding their footprints in downtown Toronto. Some businesses are even doubling their office space to accommodate the rapid growth of the tech sector. This influx of AI professionals is further solidifying Toronto’s position as a leading tech city.

One reason for this growth is the lower operational costs in Toronto compared to other major U.S. tech hubs. Office and labor costs in Toronto are nearly half those in San Francisco, making the city an attractive destination for businesses looking to expand without the hefty price tag of other tech capitals. Toronto’s cost-effectiveness, combined with its growing tech ecosystem, has made it an appealing location for both startups and established tech giants.

While Toronto’s tech scene is thriving, there are challenges, particularly in the housing market. Rental prices in the Greater Toronto Area (GTA) have risen by 34% over the past five years, and the cost of homeownership remains high. This could potentially hinder talent retention, as many workers factor housing affordability into their decisions about where to live and work. Nucci emphasized the importance of addressing housing challenges to remain competitive in attracting and keeping top talent.

The report also notes the growing role of Canadian cities in the tech sector. Ottawa moved up one spot to rank 10th in North America, and Calgary jumped to 17th. In contrast, cities like Vancouver, Montreal, and Waterloo saw declines in their rankings, reflecting the shifting dynamics of the tech industry across Canada. The availability of immigration-friendly policies in Canada, particularly in comparison to the U.S., has been a significant factor in attracting skilled tech workers. These policies, including more accessible visa options, make Canadian cities like Toronto an appealing choice for international talent looking to establish their careers.

In conclusion, Toronto’s tech sector is booming, with AI driving much of the growth. The city’s combination of a skilled talent pool, growing number of tech job opportunities, and lower operational costs compared to other North American tech hubs has made it a key player in the global tech industry. However, to maintain its competitive edge and continue attracting top talent, addressing housing affordability will be crucial for the city’s long-term success.

In response to Toronto’s housing affordability crisis, the city is proposing incentives to encourage more rental housing construction. These measures aim to assist developers facing rising construction costs, high interest rates, and a slowing market. If approved, the plan could increase rental supply in a city struggling to meet demand.

The Toronto Star reported last month that the proposal includes waiving development charges for eligible rental projects, saving developers up to $37,636 per unit. Developers would also receive a 15% property tax reduction for 35 years, worth about $20,396 per unit. To qualify, 20% of the units must meet the city’s definition of “moderately affordable.” For example, a one-bedroom unit must be affordable to households earning $43,600 annually, with rent capped at $1,090 per month.

The initiative aims to support the construction of 7,000 rental units, including at least 1,400 affordable ones. The goal is to help developers struggling to move projects forward amid financial pressures. Mayor Olivia Chow highlighted that without intervention, the city risks missing its target of 65,000 new rental units by 2030.

The program would also allow for a potential second phase of 13,000 additional units, though this would require significant funding from provincial and federal governments. While some developers have shown cautious optimism, they stress that broader government involvement will be necessary to meet the growing demand for rental housing.

The city’s push for new rental units is essential as the average rent for a one-bedroom unit is currently $2,418 per month, far above what many households can afford. Previous city incentives, such as tax exemptions and fee waivers, aim to help developers build more rental housing. Despite concerns over lost revenue, the city sees these incentives as critical to easing the housing shortage and improving affordability.