Real estate feels like it’s at a crossroads – office vacancies, condo challenges, and a housing affordability crisis. But for Michael Cooper, Chief Responsible Officer of Dream Unlimited, there are still pockets of big opportunity. In this episode of In the Money with Amber Kanwar, Michael speaks candidly about the risks weighing on Canadian real estate and the strategies that still deliver long-term growth. You can also listen on Apple or Spotify!
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Challenges in the Office and Condo Markets
- The office sector has faced nearly a decade of turmoil since 2016, with Dream Office reducing assets from 172 to focus on quality downtown buildings, yet occupancy dropped from 97% to 84% in Toronto due to remote work trends and slow recovery.
- Condo markets are struggling with oversupply, as 25,000 units complete in 2025 amid investor pullback, rising costs, and demographic shifts from high immigration to slower population growth, leading to loosely held inventory and delayed recoveries.
- Conversion of office spaces to residential or institutional uses is limited and complex, with successes like sales to labs or governments, but broader efforts are hindered by soft condo demand and high conversion costs.
Opportunities and Growth in Real Estate
- Industrial properties have surged from $1 billion to $16 billion in value for Dream since 2016, driven by e-commerce logistics, making it one of Canada’s largest portfolios and a reliable growth area amid retail evolution.
- Western Canada stands out as a strong performer across asset classes, with Dream developing master-planned communities for 12,000+ residents, starting 2,000 apartment units this year, benefiting from higher incomes, lower costs, and better infrastructure compared to Eastern Canada.
- Apartments and retail (like grocery-anchored strips) are showing resilience, with reasonable returns from new builds in regions like Alberta and Saskatchewan, replacing condo development and supported by government incentives for affordable housing.
Broader Insights on Canada’s Economy and Housing
- Canada’s housing crisis stems more from insufficient incomes and productivity declines than supply alone, with per capita income drops and overemphasis on redistribution over economic growth exacerbating affordability issues.
- Immigration policies have backfired, luring people with promises of better lives only to face underemployment and restrictions, while homelessness is a political issue tied to individual rights versus government intervention, not a lack of funding.
- CEOs like Cooper urge more entrepreneurial focus, execution, and less reliance on U.S. dynamics, noting governments are open to developer input on solutions like waived development charges, but systemic changes are needed to boost competitiveness.
Views on M&A in the Real Estate Sector
- Dream has actively pursued M&A, including partnering with a sovereign wealth fund to acquire Summit REIT in 2023, and continues to evaluate opportunities, though after accounting for land transfer taxes, premiums, and tax issues for foreigners, public companies aren’t as cheap as perceived.
- Recent deals like InterRent’s acquisition highlight foreign buyer interest, often involving sovereign funds, but some rumored transactions are paused due to disagreements on value between companies and investors.
- Activists are pushing for sales in REITs like InterRent and H&R, but Cooper notes their mixed track record in unlocking value, emphasizing that strong real estate assets and management, not activism, drive successful M&A, amid a trend of take-privates and limited IPO success.
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