The Canadian capital that once reliably poured into U.S. commercial real estate is starting to edge away, as big institutions reassess both trade risk and pricing and quietly test out alternatives at home and in other global markets. For U.S. owners and intermediaries who have long depended on that capital, the shift is subtle but significant—and it is showing up in the numbers.
Canadian CRE investors have begun turning away from the U.S., traditionally the country's largest investment partner, because of trade tensions, according to CoStar, citing data from Colliers. The five-year annual average of total Canada-to-United States CRE transactions was $10.7 billion, but in the 12 months ending March 31, 2026, the total was down 32%, to less than half of the five-year average. The two countries have a long history of periodic trade disputes, but the current administration's turbulent 2025 tariff strategy has negatively affected the relationship between them.
Earlier this month, Canada called on the U.S. and Mexico to renew the current free trade agreement, the USMCA, among the three countries. There is a scheduled review of the pact in July. Last week, President Donald Trump posted on social media calling for Canada to become the 51st U.S. state, an attention-grabbing remark that did little to cool concerns about the overall tenor of cross‑border relations.
One of Canada's largest pension funds, La Caisse, which has historically been one of the biggest Canadian investors in U.S. commercial real estate, has been reducing its holdings in this country.
"As with all markets, we closely monitor evolving conditions, and our investment activity reflects disciplined capital deployment," La Caisse spokesperson Jean-Charles Del Duchetto told CoStar in an email. "We have also recently completed selective asset sales in the United States, continuously calibrating our exposure based on the opportunities and risks we see in this market."
One of those opportunities is the office tower at 180 N. LaSalle St. in Chicago, which La Caisse is selling for between $55 million and $60 million. The pension fund paid $198.5 million for the property in 2016, a steep reset that underscores how far prices have fallen on some U.S. office assets since the pre‑pandemic peak. For other Canadian institutions, the move is a cautionary case study in how quickly an aggressive U.S. allocation can turn into an exposure question when macro and policy risks stack up.
Even with the pullback, the U.S. remains a giant in real estate capital, according to Colliers' May 2026 Global Capital Flows report. Among the top 10 global sources of capital, the U.S. remained the largest, rising from 26.1% in the five-year average to 28.1%. Canada was second at 9.6%, now down to 7.9%, while the U.K. slipped from 6.6% to 6.4% and Sweden dropped from 6.5% to 5.8%.
The more notable change is on the destination side of the ledger. While the U.S. had been the largest cross‑border capital destination over at least the last five-year average, it dropped to second place. Over the last five-year averages for cross‑border capital destinations, the U.S. captured 19.2%, but it is now down to 15.3%. The U.K. is also at 15.3%, down from 16.1%, but slightly higher than the U.S. in absolute dollars.
Other markets are benefiting as global capital, including Canadian money, diversifies away from a purely U.S.-centric strategy. Third, fourth and fifth in cross‑border capital destinations were Germany, which fell from 9.3% to 7.8%; France, which rose from 5.5% to 7.5%; and Japan, which increased from 6.1% to 6.7%. For Canadian investors, those shifts highlight a broader recalibration of risk and return, with trade politics now sitting alongside fundamentals and currency in investment committee conversations.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.