It is no secret that Canada’s homebuilding sector has endured several difficult years. New condo sales across major markets such as the Greater Toronto Hamilton Area have dropped to levels not seen in decades. A combination of reduced immigration, high construction costs, elevated interest rates, and the collapse of investor demand has created a perfect storm of volatility. Adding to the pressure is an increasingly uncertain global economic and geopolitical climate.
As a result, many developers have been forced to pause or cancel projects entirely. However, not all are standing still. A growing segment of the industry is actively repositioning, shifting strategies to remain viable and competitive in a changing housing environment.
The common denominator among those moving forward is adaptability. Instead of waiting for ideal conditions to return, these firms are pivoting toward new models that prioritize stability, long-term returns, and operational efficiency.
One of the most significant shifts in the market has been the move toward purpose-built rental housing. As investor-driven condo demand has waned, developers are increasingly seeking predictable and recurring income streams.
According to the Canada Mortgage and Housing Corporation, purpose-built rental starts reached an all-time high in 2025. Major players such as Dream Unlimited Corp, Bosa Properties, and RioCan have all expanded their rental pipelines in response.
Dan Cupa, Senior Vice President of Residential at Bosa Properties, says rental housing has become a dominant force in development activity.
"With rental now the dominant form of housing activity, competition is increasing, and that raises the bar. Success is measured by resident retention, operational performance, and the durability of the asset over time."
Senior Vice President of Residential at Bosa Properties | Dan Cupa
While condo pre-sales still play a role in the broader housing system, the industry is clearly moving away from the investor-focused micro-unit model that defined much of the last decade. Instead, developers are placing renewed emphasis on livability, long-term value, and end-user demand.
Another key trend is strategic recapitalization. Many developers are selling non-core assets to generate liquidity and reduce debt, freeing up capital for rental and mixed-use projects.
Dream Unlimited has emerged as a benchmark in this area. Over the past 18 months, the company sold assets such as Colorado’s Arapahoe Basin Ski Resort, generating approximately $110 million USD in profit and repaying over $100 million in debt. The firm has also reduced land loan exposure by hundreds of millions of dollars through strategic property sales.
Similarly, RioCan REIT is in the middle of a major capital recycling program valued at more than $1.3 billion. By selling completed rental assets in cities such as Ottawa and Calgary, the company is deleveraging its balance sheet while focusing on new residential development tied to its core grocery-anchored portfolio.
Storeys reports that these moves reflect a broader industry shift toward financial resilience and disciplined capital deployment.
Government policy has also played a critical role in keeping projects viable. Programs such as CMHC’s Apartment Construction Loan Program, the Housing Accelerator Fund, and the removal of federal taxes on new rental construction have provided much-needed support.
Jamie Cooper, President of Development and Income Properties at Dream Unlimited, points to the financial impact of these incentives.
"The removal of taxes on purpose-built rentals has been hugely valuable. When you include affordability and sustainability, you can access financing tools and development charge waivers that make projects feasible."
President of Development & Income Properties at Dream Unlimited | Jamie Cooper
One example is Dream’s redevelopment project at 49 Ontario Street in downtown Toronto. The mixed-income, purpose-built rental development will include over 1,200 units, with more than 20 percent designated as affordable. The project secured over $600 million in government-affiliated financing and received development charge waivers from the City of Toronto.
As financing becomes more constrained, developers are also rethinking building design. Alan Nicholson, Principal at MAKE Projects, believes many stalled projects are simply overdesigned for today’s economics. He stated that he tells clients to simplify the building and reset the pro forma to something financeable which often means cutting features that no longer deliver value.
This shift involves moving away from overly complex architectural gestures and toward practical, repeatable design strategies. The focus is now on building performance, energy efficiency, and cost-effective materials that support long-term operations.
Environmental considerations are also becoming part of financial strategy. Lower energy demand and efficient building envelopes reduce future operating costs and carbon exposure, making sustainability a business case rather than just a regulatory requirement.
In an environment of rising labour costs and tight schedules, vertical integration is emerging as a powerful advantage. Developers with in-house construction teams gain greater control over cost, quality, and sequencing.
Cupa notes that vertical integration allows Bosa to make earlier decisions and manage risk more effectively.
Daniels Corporation has taken a similar approach, expanding its in-house construction and engineering capabilities and appointing its first Chief Construction Officer. This model allows the firm to operate construction as a service while maintaining oversight across complex mixed-income developments.
Looking ahead, Canada’s development landscape in 2026 will be shaped by fewer speculative condo towers and more purpose-built rental communities, mixed-income projects, and industrialized construction methods.
The firms that succeed will be those that embrace:
Purpose-built rental as a core asset class
Recapitalization and portfolio optimization
Government-backed financing and incentives
Simplified, performance-driven building design
Vertical integration and construction efficiency
Rather than waiting for market conditions to improve, these developers are actively rewriting the rules of Canadian real estate development. In a climate where debt remains expensive and labour remains scarce, speed, collaboration, and disciplined execution will define the next phase of housing delivery across the country.
For the construction sector, this shift represents not contraction, but transformation. Those who adapt will continue to build. Those who wait risk being left behind.