Keeping You Informed - Q3 2025

To our Investors and Partners,

The third quarter of 2025 marked a meaningful shift in Canada’s office markets. Leasing activity accelerated, tenants continued to make longer-term commitments, and lenders showed renewed interest in partnering with experienced sponsors to add high-quality office assets to their portfolios.

Market Backdrop

According to Oxford Economics’ Canada CRE Chartbook (Q3, 2025), the office sector remains in the early stages of recovery, with capital values beginning to stabilize and income yields holding firm.  By comparison, other asset classes (industrial, retail and multifamily) are further along in the cycle, supported by sustained rental growth and modest yield compression.    

This improvement has been aided by the continued easing of monetary policy, with the Bank of Canada lowering its benchmark rate to 2.25% in October, extending a rate-cutting cycle that began in June 2024. The combination of lower borrowing costs and stabilizing fundamentals has renewed both investor and lender confidence across the sector.

CBRE’s Canada Office Figures for the quarter confirm these dynamics.  National vacancy declined to its lowest level since 2022, while sublease availability continued to fall, now well below its 2023 peak.  Construction activity is at a 20-year low, with no major new projects commencing since mid-2024.  

The bifurcation between Class A and lower-quality assets remains pronounced.  Toronto recorded the sharpest quarterly improvement in Class A vacancy since 2008, while conditions in Class B and C properties continues to soften.  This on-going flight to quality aligns directly with Crown’s value-add thesis:  repositioning assets to “best-in-class” to meet modern tenant expectations as employers re-establish the office’s role as a place for communication, collaboration, and in-person engagement.  

Leasing across Crown’s portfolio in Q3 was notable not only for its volume but also for its scale and composition. We have seen the average size of leased space increase meaningfully over historical norms, driven by tenants securing high-quality space on longer lease terms.

Q3 Highlights

• Completed 89% of annual leasing target, with 87% of renewals at or above in-place rents

• The Q3 average deal size of 7,594 sq. ft. across our managed portfolio was 22% larger than our historical average deal size  

• YTD, Crown finalized 23 transactions over 10,000 sq. ft.

• Reviewed over $420 million in new acquisition opportunities across our core markets

• During Q3, we entered into contracts to sell two properties, initiated marketing for three properties, and reviewed BOV’s for four properties across the portfolio

Looking Ahead

For investors with patience and conviction, the current backdrop creates a rare opportunity to acquire high-quality assets below replacement cost as fundamentals strengthen.

Crown’s strategy remains consistent:  acquire best-in-class assets in submarkets where we have conviction that we can capture tenant demand through repositioning the asset, while maintaining flexibility to sell when liquidity supports value. The same dislocation that has held back capital flows is also what allows disciplined buyers to underwrite outsized forward returns.  

As both an active seller and disciplined buyer, Crown is well positioned to capture the upside of recovery while carefully managing risk.

We thank you for your continued partnership and welcome the opportunity to continue to discuss our outlook and future pipeline.

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