‘It’s little wonder that real estate ranks first among the top five private investments multi-family offices are recommending to clients’
David Israelson, Canadian Family Offices
Canada’s multi-family offices (MFOs) are looking toward 2026 with cautious concern about the R-word—recession—showing up in the new year. According to a new survey by Canadian Family Offices, 58 per cent of multi-family offices believe a recession is somewhat or very likely in the next 12 months.
In these circumstances, it’s little wonder that real estate ranks first among the top five private investments multi-family offices are recommending to clients, says Michael Beaupré, Managing Director, Client Relationships at Institutional Mortgage Capital (IMC) in Toronto.
“It makes sense for family offices to look at increasing their investment in real estate now. A recession may or may not come, but if a majority of family offices expect one, they’ll want to be prepared,” Beaupré says.
The impact of an economic downturn is usually uneven across different asset classes, he explains. Central banks are still struggling to keep inflation under control, in the two per cent annual range, “and we still don’t know what the impact of all the moves on international trade deals and tariffs will be.”
Unemployment is creeping up, too, especially hard for younger jobseekers. The jobless rate in the United States, according to The Bureau of Labor Statistics is reported at 4.4 per cent as of December. in Canada, unemployment is now at its highest in four years, standing at 6.8 per cent according to Statistics Canada in December.
Another concern about the economy is that consumer sentiment is extremely low right now, he added. “I’m noting that consumption is being driven by the highest-income portion of the population, at least in the U.S.,” says Beaupré. “Lower-income people simply can’t afford to consume after they’ve bought groceries and other essentials. Growth is not sustainable in an economy being driven by the top 10 to 15 per cent.”
“Investors are looking to real estate because they’re concerned that valuations in publicly traded equities are stretched. They’re especially worried that the huge recent rise in artificial intelligence (AI) company valuations could reverse and impact the stock market. Real estate is more reliable,” Beaupré says.
Large-scale investors are already paying attention. “In the second half of the year, we began to see market momentum building. Institutional investors who had stepped back from their home markets are returning as confidence grows, big-ticket office deals are returning,” Colliers Canada says in its 2026 Global Investor Outlook.
“Industrial assets remain in strong demand and data centres are witnessing unprecedented levels of fundraising. Looking ahead to 2026, we expect transaction volumes to rise steadily. Investors are becoming more selective and strategic.”
A lot of high-net-worth families have experience with real estate. “Many of them made their money in the property business in the first place; others have done well either owning or investing in buildings for their businesses, condos or vacation properties for themselves, or other types of property,” Beaupré says.
The varied experience of families in property investment simply underscores that real estate is a broad asset class. “There are many ways for a family to boost its exposure,” he adds.
Canada’s MFOs seem to have noticed this already. In the past six months alone, 19 per cent of multi-family offices increased their real estate exposure, while 60 per cent kept their positions unchanged, according to the Canadian Family Offices report.
“Investing in real estate generally can be a good way to hedge against both inflation and market volatility,” Beaupré says. “Investing in real estate debt can be a particularly good way to mitigate these risks.”
There is always a concern that in a severe recession some real estate debtors will default, leaving family offices and other debt investors stuck with properties that are difficult to sell and costly to maintain. These worries should be put in perspective, though, Beaupré says.
“There are a few examples of property givebacks [debtors defaulting] in the United States, but it’s not the same in Canada. When the markets are running smoothly, the average default rate in Canada is one per cent of all loans, and even in the bad times of the 2008 recession, it was only 1.5 per cent.”
Cuts in key lending rates by the U.S. Federal Reserve and Bank of Canada mean potentially lower yields on new real estate loans for family offices, but the lower rates also help improve the creditworthiness of borrowers, and a stable interest rate environment means less overall economic volatility, which helps maintain a healthier real estate market. As well, family offices and other high-net-worth lenders can protect their yields from future rate cuts by negotiating floating rate loans, Beaupré says.
Investors should look to diversify the types of real estate assets they invest in and hold, he adds.
“It’s best to avoid concentrating on a single market. Canada is a great place to invest in real estate debt, but within Canada I would look to be as diversified as possible rather than focus on one geographical area or one asset class.”
There’s a wide range of opportunities in different sectors—for example, multi-unit, small bay industrial property, seniors’ and student housing, and fast-growing regions such as Calgary, Beaupré adds.
“The market shocks we may face are still unknown. Real estate and real estate debt are great ways to mitigate the risks.”
Disclaimer: This story was created by Canadian Family Offices’ commercial content division on behalf of Institutional Mortgage Capital (IMC), which is a member and content provider of this publication.
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