Office growth, however, pulled back during the first quarter and was the only asset class to post a quarter-over-quarter decline in sales volume. The sector posted an 18% volume decrease to $13.7 billion, while individual property transactions increased as did deals in central business districts. Jodka noted pricing appears to be bottoming in the office sector with both suburban and CBD values gaining on a quarterly basis.
Industrial volume was up 24% year over year to $22.3 billion, with both individual and portfolio sales rising during the quarter. Longer weighted average lease term (WALT) deals are gaining traction, and an uptick in domestic production and reshoring bodes well for future demand and development. Jodka noted higher trade barriers could weigh on the sector.
Retail volume gained 2% to $16.5 billion, with single-asset deals rising 1%. Consumers appear to have adjusted their spending patterns ahead of potential tariff-related price increases, which has propped up overall performance but could lead to a dip in future spending patterns, said the report.
Finally, the hospitality sector is showing mixed sales signals, with volume increasing 27% year over year, which was one of the strongest performances across asset classes during the quarter. However, that compares with a weak first quarter 2024 performance, noted Jodka. Hospitality investment activity has fallen for three consecutive quarters, impacted by market volatility in hotel room nights. Travel changes related to government policy may weigh on the hospitality sector, particularly if fewer Canadian visitors travel to the United States, said the report.