Buoyed by offshore oil production and strength in manufacturing, Newfoundland-Labrador is expected to lead the country in of GDP growth for the second year in a row. While significant capital investment in mining, energy and infrastructure projects is occurring throughout the province, the impact on the commercial real estate market has been limited to date. Fifteen transactions were reported in the Newfoundland-Labrador commercial real estate market over the $500,000 price point between January and April of this year on the province’s MLS system—including a commercial mix building that sold for $4.2 million. Last year, just seven commercial properties changed hands, with the most expensive selling for $2 million in Labrador City.
Industrial continues to experience high demand
Industrial remains most sought-after, with cap rates running between seven and eight per cent. End-s are fueling demand for smaller 2,000 – 3,000 sq. ft flex-space industrial properties, with two to three offices and warehousing facilities. Leasing is also popular, with existing office space renting from between $12 – $16 per square foot, compared to $21- $22 per square foot for newer construction.
While St. John’s office market is picking up, vacancy rates still hover north of 20 per cent. With more than 3.3 million square feet currently available for lease in the downtown core and availability across all classes, most landlords are offering incentives. The Beothuk Building is reporting 100 per cent occupancy – up from 38 per cent one year ago. Some of the more prominent moves in the market have occurred in the Scotia Centre, which recently leased out approximately 17,000 sq. ft.
Strong residential activity, particularly in the St. John’s area, is prompting an increase affordable housing projects. Some non-profit developments are breaking ground this year, while purpose-built rentals are made possible with government-assisted grants. Institutional investors and REITs are active in St. John’s multi-family asset class, acquiring large apartment portfolios.
Retail and residential activity intensifies in St. John’s
Retail remains healthy in St. John’s, with the Avalon Mall and big box stores—including the largest Costco in Canada, Marshalls, HomeSense, and Mark’s—at the Shoppes of Galway, drawing shoppers from all areas of the province. The Shoppes of Galway continues to expand, with 700,000 sq. ft. of retail available for lease, and the development is positioned for further growth with a 2,400-acre master planned community in progress.
Mega-projects signal long-term momentum
With a growing pipeline of resource and infrastructure projects, ed by robust government and private-sector investment, Newfoundland-Labrador is entering a period of renewed economic momentum. The Memorandum of Understanding (MOU) agreement between Quebec and Newfoundland and Labrador terminates and replaces the 1969 Upper Churchill Contract, with a new energy partnership formed between the provinces that is expected to generate $225 billion in revenue. New mining initiatives are in place for Vale’s Voisey’s Bay Mine, Labrador Iron Mines – James Mine, the Rambler Copper-Gold Project and the Valentine Gold Project, while new energy projects include the Terra Nova FPSO Life Extension, Voisey’s Bay Wind Energy Project, as well as the Toqlukuti’k Wind and Hydrogen Project. Government infrastructure plans to upgrade roads and highways, military infrastructure at the Department of National Defence, alongside the construction of hospitals and clinics represent billions of investment dollars.
While commercial real estate activity has been brisk to date, indicators point to a continued upswing as major developments advance. The province’s strong fundamentals—led by solid industrial demand, expanding retail, and institutional interest in multi-family assets—underscore a market poised for growth. Investment in new building construction in the province rose to over $34 million in March 2025, according to Statistics Canada, up 30 per cent over the level reported one year ago. Confidence is building, and the outlook for commercial real estate in Newfoundland-Labrador is increasingly optimistic.
