Grocery-anchored real estate

Investing in grocery-anchored real estate offers a significant advantage for savvy investors: stability.

Think about your go-to supermarket — the one you visit every week. How long has it been in the same spot? Likely for years, if not decades. That consistency highlights the appeal of this sector.

Unlike office buildings or other commercial properties, necessity-based real estate caters to the everyday needs of local communities.

Mallah shared that while he had opportunities to invest in shopping malls, he deliberately chose not to due to the inherent risks associated with them.

Instead, he gravitated toward necessity real estate, which he finds far more appealing. “I had opportunities to buy shopping malls, and I didn’t do it because I was afraid of them,” Mallah admitted. “But I like this stuff,” he added, referring to the essential real estate properties that form the cornerstone of his portfolio.

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How to invest in real estate

Investing in commercial properties — such as office buildings, retail spaces, or industrial facilities — can generate steady rental income and long-term appreciation. While commercial real estate typically requires more capital and expertise than residential investments, it also offers higher returns. Investors can buy commercial properties outright, join a commercial real estate fund, or invest through a REIT specializing in commercial assets.

You can technically invest directly in commercial properties, but most of us don’t have a spare $1 or $2 million to go toward the hefty down payment (at least, not yet). A more accessible way to invest is through a real estate investment trust (REIT) or mutual fund or ETF that focuses on commercial real estate. These products allow investors to purchase shares of the fund — giving the investor exposure in real estate without becoming a landlord.

Like ETFs and mutual funds, REITs pool funds from investors to buy and manage income-generating real estate, including residential, commercial and industrial buildings. They’re attractive for Canadian investors as they provide steady income through rental earnings without being a direct landlord. This is because a REIT is managed by a firm (the trust) that collects rents, before deducting expenses and calculating net income. Due to tax law, REITs must distribute at least 90% of their taxable income to shareholders each year (in order to maintain their tax-advantaged status) — and this distribution is usually done in the form of monthly or quarterly dividend payments.

Best REIT for industrial and retail spaces

With interest rates decreasing and market trends stabilizing, 2025 is an ideal time to consider adding Canadian REITs to your investment portfolio.

Retail REITs

SmartCentres REIT (TSX:SRU.UN)

As Canada’s leading retail REIT, SmartCentres owns 195 properties nationwide and is known for having Walmart as its largest tenant. It has an impressive 7.59% dividend yield and a market capitalization of CA$4.1 billion. SmartCentres offers stable cash flow and long-term growth potential, making it attractive to income-focused investors. While e-commerce growth may pose a threat, SmartCentres is adapting by expanding into mixed-use developments that integrate residential and commercial spaces to strengthen its value in the years ahead.

Industrial REITs

  • Dream Industrial REIT (TSX:DIR.UN)
  • Granite REIT (TSX:GRT.UN)
  • Melcor REIT (TSX:MR.UN)
  • Nexus Industrial REIT (TSX:NXR.UN)

Industrial REITs perform well when there’s growth in e-commerce and technology. They can withstand recessions, particularly in the logistics and warehouse industries. However, these REITs can be impacted by global supply chain issues — like we witnessed during COVD — regulatory issues and tenant defaulting on lease payments.

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Jing Pan Investment Reporter

Jing is an investment reporter for Money.ca. Prior to joining the team, Jing was a research analyst and editor at one of the leading financial publishing companies in North America. Jing has covered numerous aspects of the financial markets, from blue chip dividend stocks to small cap tech stocks to precious metals and currency. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. In his spare time, Jing plays basketball, the violin and the ukulele.

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