This article is part of our September Special Report on Real Estate in Canada. To see all the articles, click here.
On Oct.1, Canadian Family Offices hosted an expert panel, sponsored by CMI Financial Group, that looked at the state of real estate across the country and its impact on family offices and their portfolios. Among the topics covered: the condo downturn, remaining and new opportunities in that sector, and the overall impact of tariffs on industrials and where family offices are looking for investment opportunities.
The panel featured:
- Fred Cassano, partner, national private real estate leader for PwC Canada
- Quinntin Fong, senior vice president at Fiera Real Estate and fund manager of the Fiera Real Estate Industrial Fund
- Bryan Jaskolka, CEO, CMI Financial Group
- Moderator Ashley Redmond, senior editor, Canadian Family Offices
Here is the full transcript of the panel discussion:
*This transcript is provided for convenience and is based on the audio recording of the video. While efforts have been made to ensure accuracy, minor errors are possible.
Ashley: Hello, and thank you for joining today. My name is Ashley Redmond, and I’m a Senior Editor at Canadian Family Offices. Today’s panel is presented by CMI Financial Group, a Canadian alternative mortgage lending and investment firm founded just over 20 years ago by Bryan Jaskolka, who is also on today’s panel. Today, we have brought together three experts to discuss real estate, which is important to most Canadians, but particularly to family offices. For many family offices, it’s been and is a core asset within their portfolios. Now, I would like to make a note here for our audience. We originally had four panelists. Unfortunately, Braiden Goodchild from Equiton could not make it. But our other three panelists are extremely capable, and you’re in good hands with me steering the ship. Today, we’ll look broadly at real estate, but we’ll also look at what’s the state of real estate right now, higher borrowing costs, depressed valuations, higher cap rates, and as a recent article questioned in Canadian family offices, could Canadian family offices be falling out of love with real estate? Let’s turn to the panelists who are graciously sharing their time and insights with us today. We’ll go around, and panelists, if you can introduce yourself, your name, and what you do in under one minute, that would be great. Let’s start with Fred Cassano, partner at National Private Real Estate Leader for PwC Canada.
Fred: Good afternoon, everyone. Thank you, Ashley, for having me back. I’m part of the National Real Estate team and focus on private company practice. I’m a tax partner, so I spend my days M&A and real estate transactions and corporate structuring. And I also every year co-author the Canadian chapter of Emerging Trends in Real Estate publication, which we, PwC and Urban Land Institute, publish every year. We are now in our 22nd year, which we’re about to launch at the end of this month. So, I will draw from my experiences working with real estate families and from our industry leaders and what they told us during Emerging Trends to draw insights that can hopefully help you make informed decisions on real estate for today and in the future.
Ashley: Wonderful. Next up is Quinntin Fong, senior VP at Fiera Real Estate and fund manager of the Fiera Real Estate Industrial Fund, and he is also back. He was on last year’s panel with Fred. Quinntin, over to you.
Quinntin: Thanks, Ashley. Good to be back. So good afternoon or good morning if you’re on the West Coast. So, as Ashley mentioned, with Fiera Real Estate, we’re the real estate arm of Fiera Capital, a global asset manager listed on the TSX with about 160 billion of assets managed globally in all major asset classes from public, fixed income, to private markets. In particular, the real estate platform is about 12 billion globally. About 10 billion of that is in Canada, and that’s where the majority of our assets are focused across all major sectors, coast to coast, and through investment fund vehicles across the risk spectrum from open-ended core diversified funds, development funds, separately managed accounts, as well as an open-ended core plus industrial fund, for which I lead as the fund manager. In particular, our fund, for the industrial fund, is a small and mid-bay focused industrial specialist, a little bit more niche, more small cap, if you will, quasi-alternative real estate. But we function as an institutionally managed fund with over a billion assets under management with predominantly institutional investors, but also a growing high net worth base inclusive of single and multi-family offices. So really excited to provide that institutional real estate fund lens with a perspective for family offices.
Ashley: Okay. Thank you, Quinntin. Next, last but not least, Bryan Jaskolka, CEO at CMI Financial Group.
Bryan: Thank you, Ashley. So, I’m Bryan Jaskolka. I’m the founder and CEO of the CMI Financial Group. CMI was founded back in 2005, so just a little over 20 years ago. And in 2008, we started up as a private lending company, which is today our core focus. We’ve done over $4 billion in residential-backed private mortgage investments, all in Canada, coast to coast, so British Columbia, Alberta, Ontario, now Quebec as well. Our business has been built on accredited investors as well as ultra-high net worth and typically SFOs. We have as well multiple mortgage investment corporations on our platform and then work with family offices on separately managed accounts to help them build private curated portfolios according to their risk. We manage sort of the transaction really end to end, so it’s an enterprise solution for our investors.
Ashley: Yeah, so all three of you have quite a different lens. This is going to be good. So, let’s get into it. We’ll start with the macro view, and then I want to narrow our focus. So given the current economic conditions with tariffs and elevated global energy prices due to geopolitical conflicts, a recent RBC report cites data for Q3 pointing to slowing growth. So how does this type of outlook affect the overall outlook for real estate? And Fred, I’d like to start with you.
Fred: So, I think the uncertainty is real, right? We’re hearing trade disputes, operating costs, compressed yields, and certainly five of the nine central banks have raised rates in 2026 after the energy shock, so yields are compressing. But in our Emerging Trends report, we’re also hearing optimism. And I can tell you the amount of interviewees that have cited that we’re at the bottom or close to the bottom is a signal for more transaction volume, more opportunities in real estate. And of course, you have to pair it against other alternative asset classes. But certainly, it’s attracting a lot of interest, and there’s a lot of tailwinds, right? And I think the tailwinds that gives me reason to be optimistic are on the macro side, the amount of Canadian infrastructure spending that our research is showing $4.7 trillion is going to be spent over the next many years, which will be amazing from unlocking real estate asset classes, from housing to industrial to logistics. So, I think that’s a tailwind that we have to really pay attention to. Demographics, seniors, hottest asset class. Baby boomers turned 80 this year, so I think that will be continued growth for seniors and adjacent asset classes. And also, operational excellence. We can’t just rely on cap rates compression for value creation. So, because the margins are going to be very tight, I think there’s an opportunity to really be rewarded on the operating side of the business, including AI as an enabler. So I think yes, the headlines are real, Ashley. I think there’s optimism for growth, and you have to really go into each of the asset classes to find out how they’re behaving differently.
Ashley: Okay. And Bryan, I’m curious how you respond to that question as a lender, and I believe particularly in the residential space.
Bryan: Yeah, no, it’s a great question. Our view is, of course, the last 18 months have been quite challenging, perhaps even a little bit longer than that. We are seeing similar signals across our business lines as well that I think it’s hard to call a bottom, but certainly the rate of change has slowed at a minimum. And I think as many people know, real estate, especially in Canada, is regionalized. It’s really comprised of many different marketplaces. And so, I think what happens is we think about real estate and certainly residential, we tend to talk about national figures. But regional areas have outperformed, like in Alberta, like in Quebec, and in many ways, not entirely, but sort of the current real estate challenges on the residential side are more of a GVA and Golden Horseshoe type of story than they are necessarily a fully national story. And so, I always like to point that out when we speak with investors and how we look at our portfolio, we have to look at the underlying specifics. I think today the risk has shifted more from the property side to the borrower side, and we’re watching closely the impacts of tariffs as well as unemployment, population growth trends, and how these are impacting the overall underlying markets that underpin our portfolios and assets. But I think generally speaking, we have found that the market rate of change on the decline has certainly improved. And in some areas, we are starting to see offers above ask and multiple offers slowly creeping back in to the marketplace. So, we look at those as being encouraging signs. And I think that at the end of the day, as Fred sort of indicated, there’s a lot of investment that is coming into Canada on an infrastructure level, manufacturing, defense spending, resource spending. And our view is that that will ultimately underpin the fundamentals for residential real estate, especially when you consider the fact that we have not been able to build enough housing units in Canada for a very long time. Despite a lot of effort from the government, we have not really been able to change that, and Canada remains the number one underhoused in the G7 when you look at it on a population basis as well.
Ashley: Okay. Okay. Interesting, Bryan. And you mentioned tariffs. So Quinntin, I want to bring you in here on tariffs, please. I know Joe asked you a similar question last year, but these tariffs, as we all know, just will not die. So how are tariffs and trade uncertainty affecting industrials? And Quinntin, last year you said that deals are taking longer to get done with businesses being a little uncertain on tariffs and their growth plans. Is that still the case?
Quinntin: Yeah, it’s our favorite headline apparently for the industrial real estate market. I would say a few things have changed since our last panel, I guess in September last year of ’25. I think the storyline at that point was everything was taking longer, businesses were taking longer to make decisions. But what’s interesting is heading into the final quarter and even early 2026, we actually saw a lot of momentum. And so, the initial headlines that industrial would be disproportionately impacted by tariffs or the perceived impact of it, I think largely was maybe an overstatement. Because what we actually saw and what we see now in the latest data that just came out actually earlier this morning from CBRE is we’ve now hit two quarters in a row of decreasing availability, four quarters in a row of positive absorption. So, I think the tides were turning, and on the ground, we were seeing that as well in our portfolio. We manage over 100 buildings with over 500 tenants, and we’re starting to see that momentum pick back up. But with that said, I think the impact of the most recent news obviously provides a little bit of a shadow, and I think it’d be hard pressed to say there’s going to be no impact. But I think people are now, businesses have a better understanding of the rules of engagement. They know that there’s going to be this uncertainty they have to deal with, know that for their businesses, their expansion plans, their existing supply chains, they need to make adjustments. And so even anecdotally over the last few months, we’ve even heard some of our tenants shifting where they’re sourcing some certain parts. We have an air conditioning manufacturer that initially sourced certain parts that came through the US, but they’ve already pivoted to an Australian supply. So, some of that supply chain movement I think is already taking place. And alongside the fact that Fred had mentioned the fiscal policy, the pro-spending infrastructure, Build Canada, Manufacturing Canada, what have you, I think that all is actually providing a good counterbalance to some of the tariff news. So, I do expect that it’s not going to be the same acceleration we’re hoping for, but I think for industrial in particular, for the most part, I think we’ve hit the bottom, and I don’t think the tariffs will significantly unwind that momentum.
Ashley: Okay. Anyone else want to jump in on tariffs before we-
Fred: Well, you heard Quinntin say bottom, right? So, he’s joining the list of individuals that are seeing bottom or close to, so that’s a positive sign. And I agree with you. I think, Bryan, you also mentioned defense. The next wave of potential industrial activity would be on the defense spending, whether it’s trying to identify the ports or strategic locations, or if there’s locations that maybe have suffered unfortunately, Southwestern Ontario and maybe our auto community, maybe repurposing some of those facilities for robotics or defense-led industrial. But I also think, the industrial has absorbed well, and we’re starting to see leveling off of rents and potential rent appreciation in a few years because of infrastructure spending. So, I remain optimistic on this sector for sure. And we’re starting to see transactions, right? Large scale transactions. We saw the Caisse and Beedie joint venture and a few others, Dream also getting in on the action with industrial. So, I think when capital starts following this asset class, it’s also a very positive sign.
Ashley: Okay.
Bryan: Yeah, I sort of agree with that as well. We certainly have seen those regional corridors where industrial has been more impacted over the last 24 months. We’ve seen more impact on housing, and naturally demand has been lessened in those markets. But my view as well is that as you see those areas stabilize, that’s definitely going to bring back employment. At the end of the day, employment is one of the key drivers for housing, right? So, people want to live where they work, particularly manufacturing, particularly in industrial areas. And so, I agree that as that continues to reposition into essentially the new economy, you’ll see those areas rebound. And they actually have a pretty good affordability rate compared to a lot of the other major cities. And so, I think that will be, in the medium term, quite beneficial for them on their valuations.
Ashley: Okay. All right, wonderful. So, most of the people watching today either work in a family office or are affiliated with family offices in some way. So I’m curious, from your perspective, have you noticed an increase or a decrease in family office real estate holdings in their overall portfolio? And is there a specific area you’re noticing that they’re interested in? Anyone?
Fred: Who’s tackling this one first?
Ashley: If you don’t want to say increase or decrease, even an area.
Quinntin: I’ll take a stab at it, given we do have a sizable family office allocation. We’re managing over 100 million of capital just in my fund alone, beyond the broader Fiera real estate scope. I think there’s been a little bit more of, I’m going to call it two stories. One is I think there’s been a rebalancing of portfolios, particularly within just private markets. I think over this last cycle of real estate being a more known asset class for especially family offices, I think there’s been more exploratory conversations on looking at other asset classes from infrastructure, private equity, private credit. So I think there’s been some natural reallocation there.
The other piece of the story is the reality is the real estate market, especially on some of the larger institutional funds in the Canadian marketplace, haven’t performed as well over the last few years. The Property Fund Index, which is the main index managed by MSCI for open-ended diversified funds in Canada, only had a 3% return last year, just under 1% over the last three years. So, I think family offices and retail money in particular are kind of running to money market and some other alternatives where they’re not seeing that return that they’re used to. And so, a little bit of it I think is a bit of a recalibration of expectation. I think real estate once upon a time was really just a diversifier uncorrelated to public markets, less volatile inflation hedge. And I think for a period of time when real estate was doing great, I think people had reset what that expectation was for their own portfolio allocation.
So, I think it’s actually a really interesting time for family offices as they reevaluate their overall portfolio construction, their asset mix, and then looking a little more broadly at what is the right real estate holding going forward. Fred kind of mentioned there’s going to be certain sectors that are going to win. I would even go a little deeper. I think sub-sectors are going to win, some that are not. And I think the actual investable asset class beyond call it direct investing, has also changed significantly with certain consolidation in public REIT markets, the news on First Capital being taken private. There’s private funds, private REITs that have had to gate their funds, redemption queues. I think that’s begged a whole other question that liquidity I think needs to be a bigger discussion point for a lot of family offices. So lot to go from there, and I want to take, and I’m sure Fred and Bryan will jump in on a bunch of that, but I’ll get us started on the allocation from a family office perspective.
Fred: Yeah, lot to unpack on that one. I would say cautiously more selective, more hands-on has been the narrative around family offices. You mentioned the gating issues. So, I think the liquidity concerns have certainly been front and center. So the rise of development funds are back, right? Because they’re closed-ended. There’s a time period of liquidation, even if you have to extend a year, that there’s liquidity moments. I think those are back in play. And also, I think the family offices are first really to fill the gap where people maybe are cautious, and they’re opportunistic.
So I would say, where’s the money going right now? So seniors, retail, industrial data centres. You can’t compete or participate directly, what are the adjacent asset classes that are evolving? So, medical office, that is tangent to the growth in seniors, right? And the more outpatient delivery of procedures and diagnostic, we’re going to start seeing I think more allocation to family office, and sorry, to medical office, which is starting to happen. Yes, it’s very more operational, but I think it’s a trending asset class because of the senior and demographics. Cold storage, right? Cold storage is an adjacent asset class to senior, but also to grocery. With the rise in the number of grocery stores, so has distribution outlets for the distribution of groceries, but also vaccines for seniors. So, I think cold storage continues to be an interesting adjacent asset class, and then power, right? We can have a discussion about talking about Trump and AI, so that likely will come up. So the biggest opportunity right now is land that has power adjacencies and private families that hold that real estate that are looking for a value proposition. And if it lands tied to power, it’s probably going to be very, very attractive for a potential data centre or other call it power adjacent sites. So, I think there are opportunities, selective but regional, like Bryan said, there’s lots of opportunities.
Bryan: Yeah. A lot of great comments there from both Quinntin and Fred. I think the key theme is selectivity. Certainly, what we hear from some of the single-family office and multi-family office people that we know is caution. And I think that’s Canada-specific, to be candid. So, there is a concern in some places in the market whether Canada has been moving in the right direction, what the future holds for Canada, whether investment opportunities here are exciting relative to non-domestic opportunities. I think that can benefit the family office operators because they do have the ability to be more agile than institutional counterparties do. And they have the ability to look at a transaction size which may fall just under what an institution may be looking for. And in Canada, part of the nice thing and the challenge for those operators is that the number of mega transactions, so to speak, really pales in comparison if you’re looking versus United States, obviously. And so, some of the large organizations just don’t have the ability to pick up some of those opportunities in Canada.
By the same token, private debt is certainly filling some of the void from institutional lenders and banks which have moved out of that marketplace. Even other private credit funds which may have gated or may be having liquidity issues. Land is a good comment because that’s actually a particular pain point. I think residentially, certainly you’ve got a lot of dormant land sitting in major metropolitan areas that has seen significant asset price deflation over time, and existing holders are feeling the burden from that, I think, quite candidly. That does, however, create new opportunities for the next cycle and the next generation for new nimble operators, efficient operators who can see those selective opportunities there specifically, and whether it’s adjacent to a new industrial site or whether it’s adjacent to seniors housing that’s coming up. For every seniors housing that needs to come up, there needs to be workers there to support it. There needs to be housing in those marketplaces. Right?
So, it’s been a really interesting dynamic as well. We’ve seen where you’ve seen some exurbanization as a result of COVID and more of a drive towards remote workplace. And so, we’ve certainly seen outer markets that have historically really been either maybe just entirely resource-focused or focused on single manufacturers or single type of employers. Those marketplaces have seen a bit of a diversification in their employment base and demographic base as a result, because people are able to, at least in the service, sorry, I guess white-collar world you would say if they’re a digital worker, and they have the ability to live in a place other than where they are. There’s been some trends back on the return-to-work front, however, and we’ve also seen people get caught in that, where they moved five hours away from where the head office was, and then they got called back into work. And that’s caused some employment dislocation from some of those employers.
But I would say, broadly speaking, we definitely find that there are interesting regional opportunities, and I think that the family office operators have the ability, and there’s enough sophistication there for them to be able to do their own research and make their own opinions in order to take advantage of those opportunities. And they may be a little bit more hands-on than just a totally passive fund or a totally passive public investment that may just be generalizing all investments in that asset class.
Ashley: Okay. All right. Thank you. Next topic, we’re going to turn to commercial real estate. A few readers asked about commercial real estate. They’re curious what’s happening with commercial real estate and any areas that are standing out right now or not doing as well as expected. In last year’s discussion, we went over high-rise towers, medical offices, business parks. Who wants to start with commercial real estate?
Fred: I think the biggest story in probably now two or three years is retail. Right? Grocery-anchored necessity-based retail has been undersupplied for years. But if you’re looking at some of the strongest returns from leasing spreads to leasing velocity to the story that’s even larger than grocery-anchored, it’s spilling over to the strip malls which is favoring a lot of capital going into retail. And you have an interesting play, right? You have strong NOI growth and a future covered land play, right, when someone’s willing to pay for density. No one’s paying for density right now, but they may in the future. So, I think retail is a very interesting story. You’re seeing a lot of large grocery store operators add across the country and a lot more funds being created for retail investments. So, I think we’re actually even at a point where people are shying away from some deals because of the prices are actually getting very frothy, which is very interesting for a sector, if you remember, that was not in favour, call it maybe five or seven years ago. So, I think the retail story is very positive.
Ashley: Interesting. Okay, Quinntin, Bryan, anything to add?
Quinntin: Sure. I’ll just jump on the retail one really quickly too. I think it’s also we’re seeing the same thing. Every institutional player is trying to get retail. They probably were intentionally underallocated over the last few years. It’s also one of the hardest asset classes to build well. And so, I think that from a family office perspective and private capital perspective, there’s a little bit of this being priced out to a degree. And so, I think the exposure to that asset class, I think, is going to look a little different. In some ways, there’s been some benefactors. Primaris as a public REIT has been extremely active, so that’s a way that retail investors and family offices get exposure. But on a direct basis to take down some of these grocery-anchored malls, you’re going to be competing with some of the Maple 8, some large institutional funds like the Fiera Core Fund as an example. So, I think just picking the asset within each, I think it’s going to look a little different.
Same thing with office and industrial. I think the bifurcation is very clear on there’s some winners, right? I think office, as we all know, the return to office, specifically for some downtown cores, and I think Toronto is probably the perfect example of it. It’s almost impossible to find space now in the main financial district. So, I think the allocators are seeing that as defensible assets again. Lending is back. Debt capital markets are definitely back for office. But again, not all office is the same. So, depending on the fund you’re looking at, the suburban office you’re looking at, I think it’s really important to underwrite it correctly for the risk you’re willing to take on and the returns there.
And same thing for industrial. I think that there’s, again, a bifurcation, partly because of some of the more recent trends, the e-commerce logistic trends that led to these large, high clear height, high amount of energy buildings that are all the vogue and a lot of institutional capital’s chasing it. But at the same time, the void that’s left behind from some of the smaller units, I think still has a place, depending on the functionality and the size of the unit. So, I think opportunity can be both at the top and bottom of the food chain, if you will, in industrial. Maybe some of the product that’s left in the middle that gets displaced.
Ashley: Okay. Anything to add, Bryan?
Bryan: Well, I just thought that Fred’s comment was quite interesting. We’ve seen some of these trends as well around retail that really has medium and long-term residential density application. I think that there’s a lot of legs to that play. We’ve certainly seen some of that happening in even major metropolitan Toronto. But I think when you look at that over time, it’s a really interesting way for a clever operator to be able to get the land to basically pay for itself for now and give them the time and opportunity to be able to develop that for long-term residential use or mixed use as well, which of course will be becoming more popular. So yeah, I thought that was right on point.
Ashley: Okay. All right. Well, this goes nicely into my next question about two sub-sectors that I’ve been so excited to ask you three about. So, I think we’ll start with condos. How are we viewing condos right now post-downturn?
Fred: It depends on what lens, right? So, if you’re a family office and you want to be opportunistic right now, I think now could be a monumental moment in time to really look at the unsold bulk condo purchase. Right? We’ve seen the word bottom has been used a few times, but even on the pricing of some of the unsold units on bulk, we’re starting to see a bottom. Right? So that’s very interesting because now if you can create a fund or buy into a fund and actually carry that unit with rent covering a favouring cost price, that could be an opportunity to really sell into a market five, six years from now if you believe that the square footage prices will increase. So, I think that’s a very interesting moment. But also, land, right? So, land has been depressed for condo sites, and we’re seeing land trade in Toronto. Right? As low as $50 a square foot, even at Yonge and Sheppard. And that to me is also another moment in time where you can start assembling land at the prices, whether it is through a distressed sale or just opportunistic, I would be really looking at the land and unsold units right now.
Ashley: Okay. Yeah, just last week I was reading there was a family office that bought up a whole floor of empty condos up in Midtown. So yeah. We should be seeing more of that. Quinntin or Bryan, condos?
Bryan: Yeah, I can just comment there. I think my view is very similar to Fred’s. At the end of the day, what you’re looking at in terms of the value and price per square foot on condos, you’ve seen a significant reduction from peak. Obviously, it’s painful for people who currently own condos and bought condos prior to the price inflation. But for people who are looking at entering the market now, you’ve seen a significant reduction in, there’s a really good opportunity I think for an entry point here, and you’re seeing more institutional capital doing that. You’re seeing those bulk transactions some centering around transit corridors naturally sort of being seen as that maybe prime opportunity. But as that continues to spread outward, as things tend to do in real estate, I think the opportunity is there to be opportunistic. And certainly, from our perspective, when we look at lending, we’re very opportunistic on condos using today’s values, and we actually tend to get significant premium on the loans that we make versus a regular single-family home. And I think that the spread there now exceeds the risk in that sense. So, we’re actually quite bullish on new loans on condos.
The other thing I think which is interesting and isn’t talked about as much, a lot of talk happens about the renewal cliff, but there’s also a condo cliff. And so, it takes a long time to build a new building and get approvals, in the city of Toronto, but in most of Canada. And given the nature of how financing works on those properties and where land has been, there really haven’t been significant new starts in the space for quite a few years now. And so, what that means is that as the significant volume of completion has already happened and is happening over the next six to 12 months, there’s really going to be a pretty significant gap where there won’t be the same volume of new product entering the market. And as Fred indicated, with land trading cheaply and new land assemblies maybe starting to happen, that’s wonderful, but that’s 2032, that’s 2033 inventory. That’s not inventory in 2028. And so, what happens is you end up with this gap and it’s the condo cliff essentially. And now you’re going to have people who are going to say, “Well, we’ve hit the bottom and we want to get into this asset prices, into this asset class.” But prices are starting to go up and there isn’t that same volume of inventory that’s coming onto the market. And as institutions and family office buy up bulk condos, the developers will not have as much of that shadow inventory either for release. And so, I think if we’re looking at the medium term, and you look out past just the next six to 12 months, there’s a pretty significant appreciation opportunity there as supply actually becomes constrained, even though the entire story today has been around oversupply.
Fred: Right. Gosh, I can almost see the headline tomorrow, “Bryan bullish on condo loan.” Can you say that again, please? Because I think that’s very-
Bryan: At today’s prices.
Ashley: All right. Well, panelists and viewers, buckle up because next is data centres, and I’m so curious about everyone’s thoughts. They are all the rage right now. We now have data centre REITs. We have family offices investing in data centres, but we also know they’re an energy suck. US data centres are projected to consume roughly 20% of US electricity by 2035, never mind what they’re going to do to the water supply. So, thoughts on data centres?
Quinntin: Maybe I’ll kick it off, and maybe I’ll say it from more the Canadian context, because I think it’s a little bit of a different opportunity set in Canada as well. And I think it’s also a little bit of a everyone sees the flashy headlines and thinks, “Oh, this is the next big thing,” adjacent to all the other tech AI trends we’re seeing. But I think in Canada, it is quite difficult to make meaningful investment here. I think for a few reasons, energy in particular. Does this, and as a real estate investor, does this borderline on the infrastructure space, right? Is it truly a real asset platform that you need to really execute on that strategy? I think what people forget about is when they think about it from a real estate play is the other uses for these buildings, the alternative uses at the end of whatever contractual term you have with whatever it is, the companies are using the space. I think it’s going to create a different type of liquidity assessment that is not going to be as comparable to a lot of other more mature real estate asset classes.
And so, I’m not necessarily saying I’m bearish on the asset or sub-asset class. I think it just needs a different lens. And also, I think people also forget there’s adjacent pieces of this data centre element where I think traditional real estate managers and traditional asset classes will have a role, and that’s being the data centres for existing businesses such as maybe a backup center for one of the major banks, the TSX, the provincial government. These are types of businesses or uses that actually just existing industrial office buildings now, that require power, but maybe not to the same degree and scale. And so, I think that there’s a different scale to play with here as well, that might be more meaningful from a real estate investment perspective. But I think I’m curious to hear what Bryan and Fred think from the pure data centre play that I think is what most people are thinking of when they read those headlines.
Fred: I think that the size of the opportunity is pretty big, right? I think RBCs forecasted $54 billion of data centre investment in Canada peaking in 2029, so this is a lot of room to grow. And I think, just to your point on maybe citing some Canadian numbers, there’s one that I read, Ottawa’s utility says data centre connection requests could exceed the city’s entire current power use. Right? So, I think the biggest constraint is power. Right? And I would play the power angle from a land perspective, which is I mentioned before, and I think one of our biggest taglines coming out of emerging trends this year will be power availability is the new form of zoning. And you know what happens with zoning, right? It increases value. So, I really play the adjacent angle from a family office because the data centre play, I believe is really concentrated now to the large institutions with hyperscaler relationships that have committed capital. So, the adjacency is probably the biggest play for family offices, which is power-served land.
Ashley: One thing I was thinking about when you said that, Fred, for family offices, if things turn really negative on data centres, say like 10 years down the road, they’re using up too much water, it’s too much of a suck on all of our resources, it probably won’t look great if a family office has their name on a data centre. Is that something family offices should think about? Do they want to be affiliated with it, or am I too negative on it and I’m thinking of it like a boogeyman?
Fred: No, you’re not negative at all. I think it’s a real concern. NIMBYism, not in my backyard, is certainly very real because the criticism is data centre comes into a town, it potentially will not create jobs. It potentially could impact the grid and therefore impact my community. However, there are adjacent jobs that are created because of the data centre. We’re talking about data centre communities, right? That will result in an offshoot of opportunities for that particular jurisdiction. So, I think it has to have a balanced view, but reputation-wise, I agree. I think people should just be aware of all the factors related to what happens to a certain community if there is an impact on the grid. But we’re also seeing the emergence of alternative power, including nuclear, and what’s happening across the country to potentially accelerate the approval of nuclear so that we’re not really impacting the grid. So, has to be a balanced perspective.
Ashley: Okay. Anything to add, Bryan, on data centres?
Bryan: Well, I just think the comment on power is sort of interesting, right? And I wonder whether that leads, over time, the location of some of these centers to be more localized where energy is coming from, which in Canada is Alberta, right? And where there is space and less expensive land, cooler climates. These all impact power usage. And with the advent of potential micro nuclear and other more localized power sources, I think it’s a really interesting time. And I think that from that perspective, even though today it is clearly a hot asset class, it is being consumed institutionally, and the scales are quite astronomical, really, when you think about them at these mega data centres, and it’s the next one and the bigger one, and how much bigger can it be? I think it does tend to push out probably all but the largest family offices, really, in the medium-term from that space. But is there adjacent opportunities? I think that’s an interesting way to think about it, and that may be a way to cut some of the volatility, right? But what happens in 10 years is really hard to predict because it’s hard to predict what happens in 12 months right now, in the AI space, right? So, I think you’ve really got to have good staying power and be willing to ride the ups and downs in the ways there if that’s the asset that you’re going to move into.
Ashley: Okay. All right. Thank you. And panelists, I would like to jump down to the reader questions because we just have 19 minutes left. The time flies. And the CFO readers put a lot of thought into these questions, so I’d like to get to as many as possible. And thank you for everyone watching that submitted them. We so appreciate it. So Bryan, let’s go to you for the first one. Okay. The mortgage renewal wave is reaching borrowers who locked in at pandemic-era rates. How is the private lending market absorbing borrowers who don’t re-qualify at the banks, and what separates a disciplined private lender from a poorly run one in a cycle like this?
Bryan: Excellent question, for sure. I would say, just talking about a disciplined lender, looking at the actual real equity when you are originating and underwriting a loan is the key. You really make your money on the loan when you underwrite the transaction initially, and if you don’t do that the right way, you’re inevitably going to have a worse portfolio quality over time, regardless of whatever the specific external factor is. For us, valuation is a key consideration, for example. We look very carefully at the underlying asset value itself and ensuring that the valuations that we obtain are reliable. I think that’s probably the most important factor that we can stress. Too many stories we’ve seen where the premise may have been correct, but the underlying loan was made by somebody who didn’t do their due diligence on that value, and as a result, they may have been at a higher exposure LTV than they thought they were. I think the other factor that’s important is really looking at the efficiency of the operations. Like for example, at our firm, we have vertically integrated services, so we have the ability to property manage that asset, we have the ability to sell that asset, we have the ability to manage the entire cradle to grave of the asset. So, it’s more than just originating the asset. It’s really a matter of how you service and administer that once you own the asset, and throughout the entire lifecycle, really has a significant impact on the performance.
Talking about the renewal wave itself specifically, I think it’s a factor. I do think that the general media has a tendency of latching onto these concepts that generate great headlines and may not always play out in practice. While, yes, there is a mathematical view that every person has a five-year mortgage and so this is the cliff, so to speak, we’ve already seen what was perceived as a cliff for many years continually erode. Part of it was just through awareness, and that’s a positive of the media attention to that. So, people did look to get away or ahead of that curve in some respects. I think there’s a smaller and smaller cohort who really sat on their mortgage and are waiting to the last day. We’ve also seen rates certainly go up from the pandemic era, and when we were looking at that being a really key risk factor, the bank of Canada rates were significantly higher. Five-year fixed rates were significantly higher. Those have come off their peaks, and so you are able to get a mortgage today which is higher than the pandemic era low, but significantly less than it was at its peak a few years ago. And I think that’s also reduced some of the overall risk in the marketplace.
So, I think that as a private lender, at the end of the day, there’s a lot of opportunity for us to provide solutions to some of those people who may be in a gap period, for their renewal and who may not re-qualify. Maybe it’s non-traditional income or someone who works business for self. And that’s part of what creates opportunities for family offices to build portfolios of quality private credit assets.
Ashley: Awesome. Okay. Thank you, Bryan. Quinntin, this one is for you. This is a reader from, it looks like the Prairies. Okay, Quinntin, what falls below your minimum deal size and therefore never sees an institutional bid at all? If a family office were to deliberately hunt where you cannot currently go, what might you pursue and where would you wave it off, because the reason nobody is bidding is that the asset is genuinely worse or worsening?
Quinntin: Well, a lot of questions there. So maybe the first part of that question on minimum deal size. So probably not an answer that you want to hear, at least for industrial strategies. We actually play in what we typically like to call the private space, family office space, if you were, where we actually do deals in the $1, $2 million range even. So for us, part of where we are differentiated in the institutional space is we play in that small cap space of industrial product. So, in that regard, I think sometimes the minimum deal size may not really be the driver of the difference there, and I think there are also other quasi-institutional or private funds, other private capital funds that are playing in smaller size, smaller cap spaces given the crowding at the top. Given generally across the board what we’re hearing from allocators, from foreign pensions, domestic pensions, institutional funds like ours, that capital’s back across the board in every sector. So, I think it’s continuing to squeeze the private owners, the family offices.
But what I would say is, if you’re really looking for where a lot of institutions are not playing, I think that’s in the smaller markets, secondary, tertiary markets, if you will, where a lot of players are not willing to be. Even for our fund, which has a little higher allocation outside the main Greater Toronto Area, Greater Vancouver, and Calgary. We do Ottawa, Moncton, Fredericton, Southwestern Ontario, London. But I think there’s pieces there that I think could still make sense. Obviously, the higher on the risk scale, I think there’s a little bit of a potential opportunity where some institutions are willing to play in that space, depending what their return thesis is there. But I would encourage family offices to really think about the comment that I think Ashley made, which was, is there a reason no one’s bidding on it? How much risk are you willing to assume? I think for a lot of the product that’s out there, if you’re really looking at a value-add play, does the family office have the expertise to execute on it? Do they have the capital when their budget for the improvement that they need to reposition, expand, reimagine their space is going to go over budget? So, I think that individual asset exposure is something that the family office should really look into, in terms of where they can actually find maybe a safer diversified income source rather than a pure direct investment play. But otherwise, yes, smaller market Value add play potentially that some of the larger players will not be in, and opportunities where your capital behind it. I think the financing requirements are tougher now. Even though they come off the peak, they’re still not as low as they once were. And so, being a cash buyer in this current market is quite advantageous.
Fred: Can I just add to that? Because what we’re finding for some family offices is they invest in packs, right? So, there’s common groups that go in together so that you can actually have access to more of a larger deal if you invest together. And then the expertise is actually de-risked as well. So, one family is strong in one area and not in the other, and then they help each other out. And I think that’s certainly a trend that we’ve been seeing for a few years now, family offices getting together as investing in packs, right? Which is just very interesting.
Quinntin: Yeah. And actually, to add to that too, like beyond the pack, the other side of the trend that we have seen is some family offices that once made their money in real estate are getting out. I think whether it’s the succession planning that’s triggering that move, whether the next generation doesn’t want to manage the real estate or they’re looking at diversification, maybe they’re in a market that was disproportionately impacted over the recent macro themes. I think there’s a lot of different angles now and different avenues, and some of that could be transitioning and vending it into this club deal that Fred mentioned with multi-owners. Could be transitioning to an institutional fund, selling the assets and then taking units. So, there’s a few different permutations out there now that I think family offices can explore that’s not just purely either buying a REIT or buying an individual property.
Ashley: I have heard some murmurs talking about those packs. Do you find when it is a pack that they have trouble closing a deal if it’s a tighter window? Is that something that happens?
Fred: Usually there’s a lead investor that brings other people along that helps with closing the deal, right? So, we have many people that are at the table, and sometimes that stalls the process, but usually the effective club deals will elect, call it one of the representatives to represent the three or four other families to help move along the transaction.
Ashley: Okay. And probably to avoid that.
Fred: Yeah.
Ashley: Okay, yeah.
Quinntin: Anecdotally, more so when we sold to private groups like that, more so I think what we typically see is it does drag out the process because financing is difficult for new entities that are created or if they don’t have an existing entity at the point of the transaction, but also call it the sophistication of some of these groups, and depending if there is a lead, sometimes there isn’t, right? Who’s leading the charge there. I think it makes it very difficult to get deal certainty.
So as an institutional seller, I typically would not want to work with a group like that. I would pick the more institutional buyer, a more known quantity. Even if it is a private family that has large transaction history, I think the opportunity set isn’t always just simply the price. It’s who’s across the table with you. And to take the deal risk off the table, take the dead-deal costs off the table can be meaningful. And so, for family offices looking to be in the space, I think whether it’s a club deal, make sure you’re sitting next to someone on your side that has that reputation that can close the deal.
Ashley: Okay. All right, let’s move on to the next question. This is for Fred and Quinntin. It gets into the nitty-gritty, but this is what the readers want, so I’ve got to ask you guys. In the segments where transaction volume has been collapsing, appraisals are being marked off at very few comparables, and sometimes off of asking prices rather than closings. Where assets in those segments did finally trade in 2025 and 2026, what was the spread between the last carrying appraisal and the realized price, and which sectors were the worst? How much of a discount should a buyer apply to an appraisal in a market with no closed comparables?
Fred: Oh, boy. We should have some disclaimers on hand.
Ashley: We need a PowerPoint. Yeah.
Fred: Here’s the way I would approach this. Right. So yeah, you’re right. So, where there’s a risk on valuation is where there’s not a lot of transactions or comparables. So right now, land development, no income. So, value is set by other adjacent attributes. Class B and C office not trading as much as your trophy assets, so that’s going to be very hard. But where there’s bid-ask spreads that are narrowing, it’s for conviction assets like seniors, retail, and industrial, then you’re seeing multiple bids and that the tightening of the bid-ask leads to better valuation and as a result, comparables. So, I think the REIT market is very interesting because for a while the NAVs traded less than the outside value. And certainly, with the FCR and H&R deals and now Slate, I think we’re starting to see the retail REITs trade closer to the NAV. And then there’s some other REITs that are still trading below, I think, on average, 16% now. So, I think that’s also helping with valuations when you have transactions like the privatization or other big deals that you can turn to. So hopefully that’s helpful.
Ashley: Okay.
Quinntin: Yeah. What I’d add to that, maybe I guess the two parts to that question on where the spreads are in a market like Canada, difficult to always have the latest and greatest data on that. What would you do from an appraisal perspective? So, I did see some data, not in ’26 but slightly stale data now, but in ’25 from MSCI, I think it was the property index, which is about over a hundred billion in assets, pensions, private funds, REITs. And I think the spread on average is about a 5% discount from appraisal to transaction prices. Again, that varies depending on the sector and asset size. I think very similar to what Fred mentioned, like residential was I think slightly positive, but industrial slightly to the negative. Retail is probably around that average, and then office a little worse than that in the double digits. So, I think there is a bifurcation in those sectors. But I also think in ’26 that some of those directions will change. I think residential will be the other direction as an example. I think retail might be positive, as Fred spoke about as well.
But I think what I would advise to family offices, and maybe the approach that we take as institutional buyers is our basis for the price is our own underwrite. We will start by putting together what we think the asset is worth, where our conviction is, what our market data is, what comparables we’re comfortable with, and then use the appraisal more as a checkpoint to say, as a reasonable check. And I think that is where the advantage of having an institutional platform to support these decisions is helpful, whether it’s an advisor or investing through a fund where they have those resources and tools that frankly a lot of private and family offices may not have at their fingertips.
So don’t rely on appraisal as the end all, be all. I think it’s a good market value that ultimately is the basis for hard valuation in our industry. But I think the comment that the question had was no close comparables is then it’s really up to your conviction of where you think the market is going.
Fred: And the team that’s managing the asset. I think at the outset I mentioned operational excellence or what we’re hearing is the “operational alpha.” That’s going to be the next value creation moment beyond cap rates and comparables is how effective is that team that’s really working that asset class to get you to the next cycle.
Quinntin: Operational alpha, I love it. I’m gonna steal that one.
Bryan: I like that, yeah. That’s a good term. That’s good. Your headline.
Ashley: Should’ve been the name of this panel. Okay, sadly we only have five minutes left. I think for this last question I would like to touch on next gen, which Bryan mentioned at the beginning of the conversation. And as, I don’t know if you know this, but viewers, I’m sure you do, it’s one of our most popular topics on our website is next gen. So, the question is, are the next gen as interested in real estate as their older family members? So, I think this lens would be someone who thinks of real estate as the thing that the older people are interested in and invested in. So, I think that’s the lens of the question. So, if all three of you could touch on that, and we have four minutes left. Do you want to start, Bryan?
Bryan: Yeah, sure. I’m happy to take that lead off. So, we have certainly seen within multi-generational families that it is a little bit family specific. We have partners that we work with that they’re exiting the space, and they have been very successful in that over time. It tends to be the first generation or the older generation who maybe made their money in that, and now the second generation has a different view or different passions. They may be moving to different areas. So, we’ve certainly seen some of that. And likewise, we’ve also seen other families where it’s actually been an increase in interest in real estate and maybe they’ve made money on the first generation from something else that’s non-real estate specific or that passion has been carried down. It may carry down a different way. It may shift sectors. It may move to other things such as value add or more passive versus active. And I think that’s family specific is sort of what we’ve seen. The families that we work with, what they like to tell me is that you have to let the second generation take their own path and have their own passions. And I think where you get that recoil, so to speak, is when it’s forced on the next generation. But if there’s a mutual understanding and a passion for that, that is genuine, then the second generation can often be even more successful than the first generation. But it has to come from within. And otherwise, I think you could have a really successful portfolio in any asset sector. If that doesn’t carry to the second generation’s desire, then it does tend to move out to an external manager to manage that for them. And from what we have seen, often may generate subpar performance as a result.
Fred: Yeah, that’s very interesting. I think, what I’m seeing is those successful transitions include how can we operate the business differently than in the past, right? Not necessarily worse or better, but just differently. And I think what’s exciting people is technology, AI. I can’t believe we didn’t leave another half an hour just to talk about use cases and agentification and physical AI, the humanoids right now, potentially impacting real estate, the modular moment for thinking how we build differently. So, I think the next generation is looking at that right now with excitement on how do we improve operations, how we build differently, and how we incorporate technology in everything we do. That could be the next big wave. And I’d be remiss if I didn’t mention if you could do it in a tax efficient manner, right? I’m a tax partner and the generational wealth transfer is very important. You need to get that right. Start early so that there’s more after-tax dollars to help fund that wave of technology investment in the future. So, it is an exciting time for next gen.
Ashley: Wonderful. Anything to add, Quinntin?
Quinntin: Yeah, I’d echo along the same concept Bryan had, and maybe from a manager of a pooled real estate fund perspective, I think the trend that we’re seeing that most directly correlates to this is there’s more and more family offices, single and multi-family, that are coming into play, and I think that just speaks to the interest level of the next generation managing a portfolio, real estate included. So, I think the trend is going to what people are thinking. That’s the less and less of an interest.
Ashley: Okay, very last question, one word answer, and then we’ll sign off. When you look at real estate in 2027, are you optimistic, pessimistic, or neutral? Fred.
Fred: Optimistic, but it has to be earned through operational alpha.
Ashley: Bryan.
Bryan: Optimistic in the right region.
Ashley: Quinntin.
Quinntin: I was going to say selectively optimistic, but that’s too similar. But I’ll say slightly optimistic.
Ashley: I didn’t know I had three politicians on my panel. Geez. All right. Well, thank you, gentlemen. We so appreciate your time and insights. Many thanks to our panel sponsor, CMI, and of course, our loyal readers and viewers at Canadian Family Offices. Have a wonderful day, everyone. Thanks, guys.
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