According to McGrath, assets are being categorized into assets the government wants to retain for the long-term, assets that have long-lease opportunities and those that provide development opportunities for the private sector. "We have to advance our agenda and house 210,000 public servants. We don't necessarily want to redevelop properties ourselves and compete with the private sector."

McGrath said the reallocation effort involves approximately 325 properties across Canada that have a book value of C$3 billion and a market value of C$7 billion. "It's a challenge for the government to come up with an effective way to manage its portfolio. We're really looking to the private sector." To that end, government officials are working with the law firm of Blake, Cassels & Graydon LLP to formulate a plan.

Peter Senst, vice president and director, CB Richard Ellis, said interest rates are a key topic on the minds of anyone interested in real estate investment in Canada. "I think we're in a somewhat stable period, moving forward. It's all about positive economic growth." When comparing the Canada investment market to one in the US, he said, "We're a much more conservative country with conservative policies." He sees the "threat of inflation" as possible problem on the horizon. He says as prices get loftier, the competition for quality assets will evaporate as only Canadian pension funds will be able to afford to do the deals.