Canada has been the largest foreign investor in US commercial real estate since 2015, pouring approximately US$184 billion into multifamily apartments, office buildings, retail spaces, and industrial warehouses, according to data from investment research firm MSCI.
According to Business Insider, this investment pipeline is now at risk following President Donald Trump’s recent comments about annexing Canada and imposing punitive tariffs on Canadian imports.
In March, the US placed a 25 per cent tariff on certain Canadian goods and energy outside North American free trade agreements, including steel and aluminum.
Industry experts report that Canadian investors, including some of the world’s wealthiest pension funds, are reconsidering their US real estate strategies in response to the deteriorating relationship.
“There are clients who are Canadian clients who are very upset, and their first reaction is if the US can do this to a friend, then we’re not going to invest,” Mark Rose, CEO of Avison Young, a commercial real estate services firm headquartered in Toronto said.
“I don’t think that Canadian investors are running to close deals in the US today.”
The potential pullback comes at a time when foreign investment in US real estate had been showing signs of recovery.
According to CBRE, international buyers invested US$37 billion during the second half of 2024, a 31 per cent increase from the same period a year before, with Canada leading all foreign investment at approximately US$4 billion.
Gunnar Branson, CEO of the Association of Foreign Investors in Real Estate, said the unprecedented reaction from Canadian investors, saying he had “never seen so many angry Canadians before.”
He said that “there is certainly a pause going on” in terms of Canadian and broader foreign investment.
Major Canadian pension funds have been significant players in prestigious US real estate projects.
Oxford Properties, a subsidiary of the Ontario Municipal Employees Retirement System, is a partner in Hudson Yards, one of the country’s largest private real estate developments. Similarly, Caisse de dépôt et placement du Québec owns several prominent assets, including Manhattan office towers.
Some investors appear to be shifting their focus to alternative markets.
David Steinbach, global chief investment officer at development and investment firm Hines, reported increased interest in European investment funds managed by the company.
“We do have an unprecedented amount of dry powder for Europe right now,” Steinbach said, adding that global investment interest is “going to be a bit more balanced than I originally thought” between the US and Europe.
Despite these concerns, analysts believe the US will likely remain an attractive destination for global real estate investment due to its fundamental strengths.
“Does that mean the US is going to get blacklisted? The answer is absolutely not,” Dirk Aulabaugh said, global head of the advisory services group at Green Street.
“The US still has the best growth. We still have the most transparency. We still have the most stable government. So there are a lot of things that investors have to check boxes on that the US is still going to be the best.”