Stability, slowing construction in 2025 Winnipeg forecast: CBRE

Hey there, time traveller!
This article was published 14/01/2025 (234 days ago), so information in it may no longer be current.

More investment and stability — yet less building — are on Winnipeg’s horizon, a Canada-wide commercial real estate firm forecasts.

For now, anyways. It’s hard to know how Canada’s looming federal election — and Donald Trump’s incoming U.S. presidency — might affect the local real estate market, noted Paul Kornelsen, CBRE Winnipeg’s managing director.

CBRE Canada released a report Tuesday peering into what’s to come this year.

An uptick in downtown Winnipeg office-goers likely isn’t in the cards, according to the report. It predicts the core’s office vacancy rate will sit at 18.7 per cent, the record high it held through last year.

Meanwhile, suburban office vacancy may decrease slightly, dropping from 10.3 per cent in 2024 to 9.5 per cent in 2025.

“We’re seeing this all across the world,” Kornelsen said.

Meaning, there isn’t much change in office vacancy. Companies aren’t necessarily leaving downtown; new ones, however, seem to open in the suburbs, Kornelsen explained.

He listed safety, proximity to home, free parking and fewer shared spaces like elevators as reasons Winnipeg’s suburban offices tend to be more popular.

“The matter of offices downtown is a reflection, perhaps, more on the evolving nature of the workplace today,” added Loren Remillard, president of the Winnipeg Chamber of Commerce. “Hybrid is becoming more of an industry standard.”

CBRE Canada doesn’t expect any new Winnipeg office builds in 2025.

It’s projecting more supply of both retail and industrial spaces to come to market, albeit at a lesser extent than past years. Retail saw “remarkable growth” in 2024, the report describes.

Securing a shop in a desired location — for example, Polo Park or a growing neighbourhood like Bridgwater — is hard to do. There’s a lack of availability, Kornelsen explained.

Retailers wanting to enter Winnipeg are battling established companies for space, he continued. The building of retail units came to a “grinding halt” during the COVID-19 pandemic.

“There was just a lot of trepidation in the early parts of the pandemic that retail would be gone forever and everyone would shop online.”– Paul Kornelsen, CBRE Winnipeg’s managing director

“There was just a lot of trepidation in the early parts of the pandemic that retail would be gone forever and everyone would shop online.”

Since then, rising construction and labour costs have been prohibitive to expansion, Kornelsen said.

He’s noticed more retail-focused construction happening. Kildonan Crossing, the Refinery District near Abinojii Mikanah and an area north of McPhillips Street are all recipients of new retail, Kornelsen noted. Winnipeg’s retail vacancy rate hovers around 3.5 per cent.

Still, CBRE Canada is predicting less new supply of retail space in 2025 than the past two years — 20,000 square feet, as opposed to 90,000 sq. ft. in 2023 and 30,000 sq. ft. in 2024.

“Sometimes, the rents we’d need to achieve to make building a retail centre financially viable, those aren’t generally rates that we see historically in Winnipeg,” Kornelsen said. “It limits our ability for construction.”

Lowered interest rates have helped developers, he noted. The Bank of Canada cut its key policy rate 1.75 per cent last year after hiking the rate to five per cent between 2022 and 2023.

With lending rates dropping and inflation cooling, economic confidence from investors should rise, CBRE Canada anticipates.

“Winnipeg is still a great value buy,” said Remillard, comparing major cities like Toronto and Vancouver.

CBRE Canada foresees a decrease of new industrial builds in Winnipeg this year following higher construction costs and less absorption.

“The speed of construction has slowed down a bit… I think that’s due to increased construction costs, both for building and financing.”– Carly Edmundson, CentrePort Canada chief executive

City permitting and uncertainty around energy and sewer hook-ups are among the challenges developers face, Remillard noted.

Completing the north end sewage treatment plant expansion is “vital” to economic growth, he added.

CentrePort Canada, Manitoba’s inland port spanning the Rural Municiapality of Rosser and Winnipeg, has seen builds totalling 3.2 million sq. ft. from 2018 through 2024.

Building has occurred on Rosser’s side. Shovels could enter the ground on Winnipeg’s land by the end of 2025 or early 2026, said Carly Edmundson, CentrePort Canada chief executive. The city is currently working on water and wastewater infrastructure.

“Absorption continues to be strong,” Edmundson said. “The speed of construction has slowed down a bit — I think that’s due to increased construction costs, both for building and financing.”

CBRE tracked 570,000 sq. ft. of new industrial supply in Winnipeg in 2023. The number dropped to 520,000 sq. ft. last year and is projected at 200,000 sq. ft. this year.

Nationally, CBRE Canada expects investment and leasing activity to increase in 2025, contingent on global bond market conditions.

gabrielle.piche@winnipegfreepress.com