Rising Distress Signals Deepening Challenges in Canada’s Commercial Real Estate Market
Insolvencies and distressed sales in Canada’s commercial real estate sector have increased sharply over the past three years, reflecting what analysts describe as one of the industry’s most difficult cycles in decades. Data from Altus Group shows distressed transactions rising from 119 deals worth $767 million in 2023 to 191 transactions valued at over $1.5 billion in 2024, and then to 252 transactions worth more than $1.42 billion last year. These figures capture court-related situations such as creditor protection, receivership, foreclosure, or power of sale, meaning the overall level of distress is likely higher since discounted sales outside court proceedings are not included. 
Development land has been the most heavily affected asset class, as many sites produce no income while developers struggle to advance projects in the current market, particularly in the Greater Toronto Area and Metro Vancouver. Brokers say many troubled cases are tied to condominium developments where weakening prices and buyer demand have created financing challenges and deposit defaults. As property values decline, lenders are increasingly impacted and sometimes acquiring foreclosed properties through credit bids rather than accepting large loan losses. Analysts say the pace of distressed sales has eased slightly but warn that further insolvencies may still occur and that the market may not yet have reached its lowest point.
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