Happy New Year, everyone.

And here’s hoping 2026 is a hell of a lot kinder to commercial real estate than the absolute personality test that was 2025.

What kind of commercial mortgage agent would I be if I didn’t have a few thoughts on where this market is heading? (A quiet one. And we all know that’s not happening.)

So here’s my take which is not economist cosplay, not clickbait. It is just boots-on-the-ground lending reality.

The Macro Stuff (a.k.a. the things we pretend we don’t obsess over)

Bank of Canada Overnight Rate

Currently sitting around 2.25%, and I believe it stays flat through 2026.

I don’t see rate cuts.
I don’t see hikes.
I see… pause.

Benjamin Tal from CIBC recently said in an interview with the Financial Post that 2026 is a transition year for the Canadian economy — better than 2025, but not exactly a victory lap.

He’s also of the view that the Bank of Canada is done cutting.
I agree. Clip that. Save it. Move on.

5-Year Government of Canada Bond

Hovering between 2.90%–3.10%.

My view? Stability.
No dramatic swings. No chaos. Just boring.
(And in lending, boring can be beautiful.)

Inflation

Around 2%, which is exactly where the government likes it.
Goldilocks inflation. Not too hot, not too cold, just enough to keep everyone pretending things are fine.

GDP Growth

Let’s not sugarcoat it — it’s… not great.

I expect sluggish growth all year. With tariff uncertainty and CUSMA under review, I can’t see GDP pushing much beyond 1.5%, even with the federal government pumping cash like it’s a cardio workout.

Lending Landscape & Capital Availability

Tier 1 / A-Banks

They’re open for business — just not for everyone.

Expect:

  • Relentless scrutiny
  • Zero tolerance for “pro forma optimism”
  • A hard requirement for demonstrated, historical cash flow

If you can’t get past round one of credit, you’re not getting invited to round two. Period.

CMHC & Insured Lending

CMHC’s MLI Select is still the most attractive product on the market for purpose-built rentals.

But — and this is a big but — expect:

  • More underwriting
  • More questions
  • More scrutiny

With rental vacancies creeping up in certain municipalities, you’ll need to prove you can hit 50% occupancy quickly. Hope is not a strategy. Lenders want math.

Private Credit & MICs

If it weren’t for private capital, I’m convinced a lot more projects would already be in receivership.

These groups are doing the heavy lifting in Canadian development lending right now.
But let’s be clear:
They are not charities.

You will pay a premium for risk.
That’s not greed — that’s pricing reality.

Asset Class Winners & Losers

The Winners

Multi-Residential Rentals

With government-insured debt behind them, these are a no-brainer for capital markets.

Don’t confuse “willing to lend” with “no due diligence,” though.
Files still get torn apart — just not thrown out immediately.

Industrial

This sector is normalizing.

Vacancy rates are still tight, but lenders are underwriting flat rents, not fantasy growth.

If you’re pitching:

“Double-digit rent increases over a 5-year lease”

…expect a polite decline.

This is not 2022.
Stop behaving like it is.

Select Retail & Owner-Occupied

Grocery-anchored plazas remain gold.
But so do innovative, cash-flowing retail concepts.

Which brings me to…

What I Mean by Innovative Retail

This isn’t vibes. This is what lenders actually like to see.

🧩 1. Tenant Mix That Works Like a Portfolio

Not just retail — necessity + service + experience:

  • Grocery / pharmacy (traffic anchors)
  • Medical, dental, physio, vet
  • Fitness, wellness, beauty
  • Restaurants & cafés (hello patios)
  • Small professional offices above
  • Sometimes last-mile logistics or micro-warehousing

Less discretionary risk.
Stickier cash flow.
Lenders nod instead of flinch.

🔄 2. Flexible Space (Huge for Credit)

  • Moveable demising walls
  • Units that convert retail → medical → office
  • Higher clear heights & stronger power
  • Multiple permitted uses per unit

Translation: future-proofing, not wishful thinking.

🌱 3. ESG & Community Integration

Often includes:

  • EV charging
  • Energy-efficient systems
  • Walkability & transit access
  • Outdoor gathering space
  • Safe, well-lit design

This improves tenant quality, municipal support and financing options. Triple win.

📊 4. Data-Driven Leasing

Yes, really.

Owners are tracking:

  • Dwell time
  • Traffic patterns
  • Peak hours
  • Tenant synergies

And one more thing:
Don’t be afraid of owner-occupied units. Retail plazas can be condo-structured. Developers forget this option way too often.

The Losers (for now)

Office

Still a grind.

Unless you have exceptional, provable cash flow, office financing remains difficult. Vacancy rates are stubbornly high, and lenders have the scars to prove it.

Development Land & Pre-Construction Condos

Let’s call it what it is: rough.

With sales in the sewer, fewer banks are showing up — and those that do want:

  • Real pre-sales
  • Serious liquidity
  • Zero speculation energy

As Benjamin Tal pointed out, condo starts in Ontario are practically nonexistent. When governments are charging upwards of 30% in taxes and fees to build, developers simply can’t make the math work.

Tal nailed it when he said the only other products taxed at 30% are tobacco and alcohol.
Apparently, owning a home is now a sin.

And yes,  we need to fix that.

Because the reality is:

  • Wages haven’t kept up
  • Productivity is weak
  • The labour market is sluggish

All of that continues into 2026.

One Final Reality Check

If you’re within striking distance of construction — say, a year out — funding can be found.

If you’re buying land to speculate?

You’d better have:

  • Excellent credit
  • A very large down payment
  • And a strong tolerance for lender side-eye

Bottom line:
2026 isn’t a boom year.
But it’s not a collapse either.

It’s a year for:

  • Structure over speed
  • Cash flow over conjecture
  • And lenders who reward discipline

If you’re building smart, there’s capital.
If you’re winging it… good luck out there.

— Di

(And yes, I said what I said.)