Hamilton & Niagara Commercial Real Estate Overview (2025)

While tariffs on steel, aluminum and auto parts have had an impact on the Hamilton commercial real estate market’s performance this year, lower land costs continued to spur growth in the Niagara Region. Industrial sales were up significantly in Q1 2025 according to data from CoStar, with 11 properties sold, compared to five during the same period in 2024.

Despite a substantial increase in the number of industrial listings—up 35 per cent in Niagara and 33 per cent in Hamilton—lease rates continue to edge upward due to low vacancy rates. Industrial lease rates now sit at approximately $15 per square foot in Hamilton and slightly lower in the Niagara Region, hovering at between $12 and $14 per square foot. Both markets have reported shortages of serviced industrial land. Given current market conditions, there has been some repositioning as business owners downsize, especially in the manufacturing sector. Higher rental costs are behind the upswing for industrial property sales as more business owners opt for ownership. Owner-occupiers are driving demand for buildings in virtually every industrial category, with plans to retrofit to suit their needs. Growth in the airport industrial area has slowed, with the city trying to balance the impact of industrial development with its environmental impact.

Retail scarcity drives lease rate pressure 

Small service-based retail continues to perform well in Hamilton, St. Catharine’s and throughout the Niagara Region, with low vacancy rates in markets across the board sparking some talk of building on speculation. Scarcity of smaller spaces between 1,000 to 1,100 square feet and mid-sized product from 3,000 to 5,000 square feet is starting to place upward pressure on retail lease rates. Almost every strip retail plaza has a waiting list of potential tenants.

Eastgate transformation reflects long-term ambition

Malls continue to grapple with rising vacancies, looking for innovative ways to improve customer experience. Eastgate Square, servicing East Hamilton and Stoney Creek, is expected to undergo a massive transformation to provide a “revitalized retail destination and vibrant residential community.” While the development’s original plan has changed somewhat, the new proposal includes 19 residential towers that will house approximately 7,600 people in 4,300 units. The project is forecast to unfold over four phases with 10 years to full completion. Groundbreaking is yet to be determined, given that most new construction of multi-residential units has ground to a halt.

Student downturn softens rental market

An oversupply of purpose-built rental units and condominium apartments, combined with softening demand, has contributed to rising vacancy rates which remain amongst the lowest in the country. Hovering at 2.4 per cent and 1.8 per cent respectively, vacancy rates have climbed in large part due to a notable decline in international student enrolment in the area’s university and college campuses, according to the Canada Mortgage and Housing Corporation Rental Market Report issued in Fall, 2024. Cap rates for multi-family are starting to climb, with medium-sized product nearing seven per cent in Hamilton, but there is a limited supply of product in the pipeline.

Office leasing remains stagnant in Hamilton’s core, with listings having more than quadrupled from year’s past. Vacancy rates sit at north of 20 per cent. In April, the City of Hamilton announced it is embarking on a 10-year Downtown Revitalization Strategy to reimagine and reinvigorate the city’s core. While in its infant stages, a comprehensive plan to increase economic activity, enhance community vibrancy and generate new housing options is a step in the right direction. In contrast, new office space in Hamilton’s surrounding communities is increasingly sought after, with much lower vacancy rates.After a strong run, commercial activity in Hamilton and the Niagara Region is right-sizing, with fewer mega projects coming on stream. The shift has led to Real Estate Investment Trusts (REIT) and institutional investors stepping back, opening opportunities for smaller investors to stake their claim in the market. Programs such as Multi-Unit Residential Buildings (MURB) recently introduced in the Liberal Party platform, would support investment in the market and provide increased capital in for smaller players. However, the current lull in the market may have long-term repercussions, which may become increasingly evident when inventory levels have been absorbed and little new product is available, placing strong upward pressure on values yet again.