Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow
Industrials turnaround
Scotiabank analyst Himanshu Gupta sees a turn around in the industrial REITs sector,
“Industrial REITs: Vacancy Is Finally Peaking; Our Thoughts on USMCA & Iran War. OUR TAKE: Slight Positive. CBRE’s Q1/26 stats came out late last week. The national industrial availability rate was largely flat at 5.5 per cent (vs 5.6 per cent in Q4/25), and marking Q1/26 as the first quarter since Q3/22 when vacancy did not increase q/q. Headline market rents were flat q/q as well, after being down sequentially every quarter since mid-2023. We think Canadian industrial fundamentals are entering the third phase of the cycle: first was the COVID surge (Q3/20 to Q3/22), then came the Right-Sizing (Q4/22 to perhaps Q1/26) and now the third phase i.e. Normalization (i.e. mid-2026 and onward), where vacancy is likely to stay at these levels for the next two to four quarters, before eventually coming down next year. Industrial (economic sensitive) have underperformed REIT sector by 300bp since Iran war, although baseline macro impact remains contained; and now, back to trading at a discount relative to REIT sector on P/NAV and P/AFFO [adjusted funds from operations] basis, despite screening well on growth i.e. third-highest FFOPU [funds from operations per unit] growth (wide gap vs Apartments). GRT is our top pick given high-single digit FFO growth & relatively lower PEG.”
Rents continue lower
RBC Capital Markets analyst Pammi Bir interpreted the latest data on domestic rents,
“In conjunction with RBC Elements, our in house data science team, we track average listed monthly rents as published by the five Canadian-focused apartment REITs on their respective websites. Aggregate year-over-year listed rent growth, on a same asset basis, was negative 2.3 per cent. This compares with negative 2.7 per cent, negative 2.5 per cent, negative 3.4 per cent, negative 2.2 per cent in the prior four quarters. On a quarter-over-quarter basis, listed rents were up 0.08 per cent likely due to seasonal pick-up. Regionally, most markets saw a flat to slight improvement in year-over-year trends with hardest hit Vancouver showing most improvement likely due to base effects. Among the REITs, Boardwalk posted year-over-year listed rents of down 1.8 per cent, CAP at down 5.1 per cent and Killam at down 5.2 per cent. Incentives remain most elevated for CAP. The aggregate Mar 2026 listed rents were +11 per cent higher than Q4/25 average in-place rents (vs. up 11 per cent in Dec 2025) … By REIT, listed rent growth was as follows: Boardwalk year-over-year down 1.8 per cent year-over-year (up 0.3 per cent quarter-over-quarter), Minto down 2.6 per cent year-over-year (down 0.3 per cent quarter-over-quarter), CAP down 5.1 per cent year-over-year (down 0.3 per cent quarter-over-quarter), Killam down 5.2 per cent year-over-year (down 0.3 per cent quarter-over-quarter) and InterRent down 5.2 per cent year-over-year (down 0.3 per cent quarter-over-quarter). year-over-year trends for KMP deteriorated during the quarter primarily due to KWC and Ottawa while year-over-year trends for CAP improved due to Vancouver and Quebec City”
RBC has “outperform” ratings on Canadian Apartment Properties REIT (CAP.UN-T) and Killam Apartment REIT (KMP.UN-T).
One year from Liberation day
BMO chief economist Doug Porter summarized the Canadian economy one year removed from Liberation Day,
“The trade war has left some visible scars in Canada, with almost no job growth in the past year and a notable sag in manufacturing output (down 4 per cent year-over-year in the latest three months). The trade deficit has risen from near balance (or 0.1 per cent of GDP) to $44 billion over the past 12 months (or 1.3 per cent of GDP). And, in part exaggerated by gold sales to other countries, the share of Canadian exports to the U.S. has plummeted to 66.4 per cent, or nearly 10 ppts below the 2024 average of 76 per cent. Even so, the broader economy has hung in, with this week’s monthly GDP report posting moderate gains in the first two months of the year, and Q1 headed for growth ... As noted, we expect only modest growth for all of this year of around 1 per cent, but the economy has managed to keep its head above water. And while Canada is not immune to the shockwaves from the war with Iran, it may be one of the more insulated economies to the conflict, given its status as a net exporter of almost every commodity currently being driven higher—oil, gas, fertilizer, and aluminum. That may help explain how and why the TSX has managed to soar 30 per cent in the year since Liberation Day
Diversion
“What’s Actually the Best Way to Get a Good Night’s Sleep? We Asked Scientists” - Gizmodo