{"id":5977,"date":"2025-09-09T22:03:15","date_gmt":"2025-09-09T22:03:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/5977\/"},"modified":"2025-09-09T22:03:15","modified_gmt":"2025-09-09T22:03:15","slug":"why-some-of-canadas-biggest-pensions-are-slamming-the-brakes-on-u-s-real-estate-investment","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/5977\/","title":{"rendered":"Why some of Canada’s biggest pensions are slamming the brakes on U.S. real estate investment"},"content":{"rendered":"

\"US-BANKING-CONSTRUCTION-OFFICE-TELEWORK\" A man walks past a building with office space for rent in Washington, D.C. (Credit: ANDREW CABALLERO-REYNOLDS \/ AFP) (Photo by ANDREW CABALLERO-REYNOLDS\/AFP via Getty Images files) <\/p>\n

Two of Canada\u2019s largest pension funds say it is getting harder to justify investing in real estate south of the border, but the enormity of the market keeps the United States<\/a> on their radar.<\/p>\n

Real estate executives from the Healthcare of Ontario Pension Plan<\/a> (HOOPP) and Alberta Investment Management Corp.<\/a> (AIMCo), members of Canada\u2019s Maple Eight with close to $300 billion in assets between them at year-end, told a real estate conference run by NAIOP, known as the Commercial Real Estate Development Association, that they are taking a cautious approach on further investments.<\/p>\n

Sarah Esler, managing director and head of mortgage investments at AIMCo, said her group has been surprised to see construction costs only rise one per cent to three per cent, but they see those numbers growing.<\/p>\n

\u201cWe are still waiting to see what happens over the next little bit. It has shifted a little bit of our investment strategy in the near term, where we are putting less dollars in new financings today,\u201d she said during a panel discussion on tariffs<\/a>.<\/p>\n

The Alberta pension fund executive said labour<\/a> is something that could impact construction costs, noting undocumented workers constitute 15 per cent of workers in the United States.<\/p>\n

\u201cWhat we have seen is labour not showing up to sites, they are scared of people being deported,\u201d said Esler. \u201cNew construction, you need to really pay attention to who your contractor is and do they have good access to labour.\u201d<\/p>\n

Esler emphasized that AIMCo has been an investor in the United States going back to the global financial crisis but today money is moving back to Canada and facing a more competitive environment.<\/p>\n

\u201cWe like the U.S. still, and we are interested in continuing to develop our program there, but what we are finding challenging is hedge costs,\u201d said Esler, adding the difference in interest rates<\/a> between Canada and the United States drives costs up. \u201cIt makes it almost impossible for us to make money in that market. So we shifted our strategy more towards Europe.\u201d<\/p>\n

Eric Plesman, global head of real estate with HOOPP, said the uncertainty caused by tariffs has caused the pension fund to derisk its portfolio.<\/p>\n

\u201cNo new shovels go in the ground unless everything is pre-leased,\u201d said Plesman, speaking to the lack of appetite at the pension fund to build anything speculative.<\/p>\n

Plesman noted that the reluctance to invest south of the border is not unique to Canada. Section 899 in the Big Beautiful Bill, which would have imposed a withholding tax on pension funds and others, has spooked people, even though that piece of the legislation was withdrawn.<\/p>\n

Story Continues <\/p>\n

\u201cOur perspective is that they were intending to raise almost US$120 billion for the U.S. treasury. If you eliminate it wholeheartedly, the question is what do they put back in place to try and make up that shortfall?\u201d said Plesman, noting the United States needs that money to fund its tax reductions. \u201cThat is why capital flows are not going to the U.S. at the same level as they would have before. If I look at our own book, the bar is fairly high (for a new U.S. investment).\u201d<\/p>\n

Plesman said Canada looks like a better place to invest and the same is true for Europe, with Asia a possibility, too.<\/p>\n

\u201cI have heard this from some European investors; they have simply changed their allocation that they were otherwise making for the U.S. to come to Canada,\u201d said Plesman, adding the economic picture in Canada is not great but the country has stability.\u201d \u201cThat is an important attribute.\u201d<\/p>\n

Kevin Gorrie, the chief executive of Toronto-based Granite Real Estate Investment Trust, which owns a 65-million square foot industrial portfolio with more than half of it in the United States, said his REIT probably won\u2019t grow overall in the U.S.<\/p>\n

\u201cEverything comes with a price,\u201d said Gorrie, adding he does see shifting opportunities in some parts of America. \u201cPricing has opportunity in some markets. I think there is opportunity in Europe.\u201d<\/p>\n

The REIT executive said tariffs have not had the impact people expected but instead shifted demand in the U.S. away from places like Los Angeles, and New York and New Jersey that are import-drive and into places like the southeast.<\/p>\n

Gorrie noted anecdotally he is seeing some institutional Americans investors return to the Canadian market, after years of exiting the market for reasons other than tariffs. \u201cWe are starting to slowly see a return of the U.S. investors to Canada. I think they do like the stability,\u201d he said.<\/p>\n

\u2022 Email: gmarr@postmedia.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"A man walks past a building with office space for rent in Washington, D.C. (Credit: ANDREW CABALLERO-REYNOLDS \/…\n","protected":false},"author":2,"featured_media":5978,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[6975,6974,6977,114,245,6973,268,85,46,6972,266,267,4861,6976,6978,1032],"class_list":{"0":"post-5977","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-aimco","9":"tag-alberta-investment-management-corp","10":"tag-andrew-caballero-reynolds","11":"tag-business","12":"tag-canada","13":"tag-eric-plesman","14":"tag-finance","15":"tag-il","16":"tag-israel","17":"tag-pension-funds","18":"tag-personal-finance","19":"tag-personalfinance","20":"tag-real-estate","21":"tag-sarah-esler","22":"tag-u-s-treasury","23":"tag-united-states"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/5977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=5977"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/5977\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/5978"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=5977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=5977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=5977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}