Canada Newsletter - June 2025

Market holds steady amid stability in cap rates and uncertainty in trade

According to Altus Group’s Investment Trend Survey, the Canadian CRE industry in Q1 2025 saw investors maintaining a preference for stable, low-risk assets.

Key Highlights:

• The overall capitalization rate (OCR) remained largely stable at 5.87% in Q1, compared to 5.88% in Q4 2024.
• The top three preferred markets for investors across all asset classes were Vancouver, Halifax, and Edmonton.
• In Q1, investors’ top three preferred property types continued to be food-anchored retail strip assets, multitenant industrial, and suburban multiple-unit residential.
• Food-anchored retail strips in Vancouver were the top preferred product-market combination, followed by the same asset class in Calgary and then Montreal.

The prevailing economic uncertainty, compounded by an evolving political landscape, prompted investors to adopt a more cautious approach to capital deployment in the first quarter of 2025.

Source: Altus Group. Read the full report here.

To view larger images and dive deeper into the data, click on the images below.

On March 18, the Canadian Council of Ministers of the Environment (CCME) issued new Excess Soil Reuse Guidance, for jurisdictions to consider and apply when establishing their own excess soil reuse regimes and for landowners and consultants to consider when designing and implementing projects that generate excess soil.

CCME’s new guidance provides three general objectives:

• Avoid creating new contaminated sites,
• Manage soils sustainably (including testing, treatment, and reuse or disposal),
• Protect parties from unknowingly purchasing contaminated land.

The guidance presents a detailed roadmap for excess soil implementation for jurisdictions to follow when designing regulatory and administrative programs and standards. CCME recommends that requirements be applied through sampling and contaminant-level standards, incorporated into comprehensive site-specific soil management plans for source sites and receiving sites. Recommendations include traceability protocols to ensure that soils are tracked to allow assignment of responsibilities and liabilities, supporting appropriate destinations and end uses. Detailed examples cover various soil types, hydrology, and contaminant types, as well as different land uses referencing available standards. The guidance also references existing federal and provincial standards, including those applicable to qualified persons for soil management activities. These detailed approaches should reduce additional contamination from inadequately tested and managed soils, as well as unnecessary disposal in landfills of soils clean enough for suitable reuse.

The Canadian Securities Administrators (CSA) announced April 23 that regulators are “pausing” the development of both a new climate-related disclosure rule and amendments to existing diversity-related disclosure requirements. The goal is to make Canadian markets more competitive amid political developments in the U.S. and global economic uncertainty.

In his second term, U.S. President Donald Trump has eliminated diversity, equity, and inclusion (DEI) initiatives in the federal government and pushed companies and other organizations to reconsider their DEI programs as well. There’s been a similar pushback from those opposed to factoring environmental risks into business operations. In March, the U.S. Securities and Exchange Commission voted to end its defense of the climate-related disclosure rules adopted the previous year.

“In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient and resilient,” said Stan Magidson, Chair of the CSA and Chair and CEO of the Alberta Securities Commission.

Current Disclosure Requirements Still Stand

Canada published its original climate disclosure rule proposal in 2021, which would have clarified what climate-related information issuers must disclose to “facilitate consistency and comparability among issuers.” Although it is pausing the proposed rule, Canadian law still requires issuers to disclose material climate-related risks affecting their business.

Voluntary Standards Provide Interim Guidance

Additionally, in December 2024, the Canadian Sustainability Standards Board issued its inaugural sustainability standards, which provide a voluntary framework for sustainability and climate-related disclosures.

The CSA will continue to monitor disclosure practices and international developments and may revisit new climate and diversity-related disclosures.

Yukon is developing new rules for spill responses and the planning and conduct of site cleanups at contaminated sites (there are presently 207). They will update requirements established more than 20 years ago (2002 Contaminated Sites Regulation and 1996 Spills Regulation) and conform with statutory amendments to Yukon’s Environment Act from 2014.

The government circulated a proposed Contaminants Regulation in May 2024, and in August, solicited “targeted engagement” with Yukon First Nations governments and impacted stakeholders. The proposal includes up-to-date standards for expanded lists of contaminants, formal remedial action plans and cleanup procedures, and expansion of applicability to explicitly include agricultural and wilderness lands. They would also allow the transfer of cleanup responsibilities between parties to facilitate cleanups. The province also asked stakeholders whether Yukon should match the current British Columbia regulatory regime or the Canadian Council of Ministers of the Environment (CCME) numerical standards and analysis requirements.

Work continues. In May, Yukon published a “What We Heard” report summarizing responses. Many responses sought clarification of the new approaches and principles cited in the circulated draft to provide greater clarity and allow for more useful engagement. For standards, nearly half supported use of the BC rules, a quarter use of the CCME standards, and the rest did not state a preference. The report deems these responses positive and states the territory will move to finalize new rules. During the same period, the Legislative Assembly of Yukon enacted government-sponsored technical amendments to the Environment Act, providing statutory support for the proposed regulatory revisions “Technical Amendments (Environment) Act (2024)” (Bill 41) (effective November 4, 2024).

Environment and Climate Change Canada (ECCC) continues to expand regulatory attention to perfluoroalkyl and polyfluoroalkyl substances (PFAS). On March 5, ECCC and Health Canada issued their joint “State of Per- and Polyfluoroalkyl Substances (PFAS) Report”, a 289-page status and plan report on research, information, and regulatory efforts directed at PFAS hazards in Canada. ERIS’ last newsletter covered the final draft in detail. Later in the month, ECCC also proposed a multiphased risk management strategy for most PFAS (excluding fluoropolymers), phasing in prohibitions as follows:

• Phase 1: Prohibit the use of PFAS not currently regulated in firefighting foams.
• Phase 2: Prohibit the use of PFAS not needed for the protection of health, safety, or the environment. This would be prioritized based on benefit-cost analyses and includes cosmetics; natural health products and non-prescription drugs; food packaging materials, food additives, non-industrial food contact products; paint and coating, adhesive and sealant and, other building materials available to consumers; consumer mixtures such as cleaning products, waxes and, polishes; textiles; and ski waxes.
• Phase 3: Prohibit the use of PFAS requiring further evaluation of the role of PFAS for which currently there may not be feasible applications, including fluorinated gas; prescription drugs (human and veterinary); medical devices; industrial food contact materials; industrial sectors such as mining and petroleum; and transport and military applications.

These efforts have led to tighter restrictions on the manufacture and use of thousands of PFAS, along with more rigorous investigations into potential environmental contamination. As a result, landowners, developers, and their consultants should be prepared to respond to these evolving regulatory requirements.

In January of this year, the Ministry of the Environment, Conservation and Parks published O. Reg. 550/24, amending O. Reg. 406/19: On-Site and Excess Soil Management, giving additional time for industry to prepare for this restriction. The amendment effectively changes the in-force date of a provision to restrict the landfilling of cleaner excess soil, i.e., soil that meets Table 2.1 residential, parkland, and institutional (RPI) standards in the Rules for Soil Management and Excess Soil Quality Standards, from January 1, 2025, to January 1, 2027. The amendment repeals the provisions in section 22, entitled “Landfilling site or dump" and repeals a prior amendment to this section made by O. Reg. 174/24, which would have come into effect on January 1, 2025. The repealed provisions take effect on the filing date of this amending O. Reg. 550/24 (December 17, 2024); the new restriction (section 22) takes effect on January 1, 2027. Additional information on these changes is available in the Environmental Registry of Ontario, ERO No. 019-9196.

On December 4, 2024, the Cutting Red Tape, Building Ontario Act, 2024, Schedule 7 made a potentially significant change to Part XV.1 of the Environmental Protection Act (EPA) by granting the Lieutenant Governor in Council the authority to prescribe the circumstances under which a property owner is prohibited from submitting a Record of Site Condition (RSC). For example, in some cases, the EPA and Ontario Regulation 153/04 (RSC Regulation) may not require an RSC, but another party may stipulate the filing of an RSC as a condition of the transaction. This EPA amendment opens the possibility of prohibiting RSC filings for specified low-risk sites, thereby eliminating associated costs and delays. Additional amendments proposed by the Ministry of the Environment, Conservation and Parks expand on these changes by revising the RSC Regulation to include an exemption from RSC filing requirements for changes in the use of buildings from commercial or community use to mixed use. For additional details and to track this pending proposal, see the Environmental Registry of Ontario, ERO No. 019-9310.

The Alberta Energy Regulator (AER) recently replaced the 2022 edition of Directive 079 with a revised edition, effective on May 14, 2025. The directive is referenced in the Matters Related to Subdivision and Development Regulation, which requires developers and property owners applying for a subdivision or development permit to identify the location of any abandoned wells. It outlines specific requirements for located wells, including testing protocols and setback distances to avoid excavation risks. It also provides guidance to ensure that abandoned wells are correctly identified and placed within subdivisions and developments. This new edition expands the scope of the 2022 Directive, which covered wells associated with oil and gas under the Oil and Gas Conservation Rules, and geothermal resource development under the Geothermal Resource Development Act, to now include wells related to brine-hosted mineral resource development under the Brine-Hosted Mineral Resource Development Rules.

Content provided by STP ComplianceEHS.