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This transcript has been generated using machine learning technology. While this technology was trained with CIBC terminology, it may contain errors.
Elsa Hannaford, VP, Real Estate Finance: Thanks for being here everyone. We have another great discussion ahead. So, let&#8217;s dive right in. Scott, at the midpoint in 2025, you mentioned a return of business optimism despite ongoing trade uncertainty. Where does that stand as we head into 2026?
Scott Brown, SVP, Ontario &amp; Prairies: 2025 in a year, can be characterized with uncertainty. Despite the widespread uncertainty throughout the market, Canadian businesses have remained relatively resilient and continue to perform. We do see short-term optimism amongst smaller businesses lagging their larger peers. But when we look out to the long-term and mid-term, we do see business optimism on the rise, and for small businesses, this is returning to historical levels. As we head into 2026, we&#8217;re witnessing cautious optimism as companies prepare for a new environment. I think supply chain concerns have subsided, largely. Demand concerns are on the forefront, and companies are navigating a new, K curve environment where we are seeing different industries, different sectors being impacted much differently depending where they sit. So, the environment remains one where in this nature of, unpredictability, uncertainty, we are seeing companies have to make decisions to step off the platform and make decisions in the new environment, and many of which are wrestling with those decisions, and moving forward.
Elsa Hannaford: Okay. That&#8217;s promising to hear. And, Evan, you recently published an article with our Thought Leadership team on signs of life returning to exit markets. Can you tell us a bit more about what you&#8217;re seeing?
Evan Bennitt, SVP, Corporate Finance: Yeah. Investors continue to navigate an exit market that&#8217;s defined by both caution and complexity. Capital remains abundant, but there&#8217;s significant pressure on investors not only to deploy capital, but to realize and return capital, from assets have been held for longer periods of time. Since Labour Day, we&#8217;ve seen a meaningful increase in middle market M&amp;A activity, extending beyond just the most resilient businesses to a broader cross-section of the economy. Businesses demonstrating resiliency and operational strength continue to attract premium valuations, no real surprise there. And those offering non-discretionary products and services that remain in demand through economic cycles are seeing quite strong outcomes. On the other hand, companies that exhibit material cross-border tariff risk, even if they&#8217;re exempt under USMCA today, they&#8217;re facing more in the way of challenges, with some investors viewing them, things with those characteristics, as being off limits. That said, and in response to ongoing uncertainty, buyers and sellers are increasingly finding creative ways to bridge valuation gaps, using tools such as minority equity roles, earn outs, and other risk sharing agreements. Ultimately, it&#8217;s worth repeating that periods of uncertainty and adversity also present opportunities, for those that operate with strategic discipline and long-term views. Our focus here at CIBC, is really to support our clients as they pursue these opportunities, help them navigate the complexities of the current environment, and helping them position themselves for success through cycles.
Elsa Hannaford: Okay. And Tim, the last time we spoke, you mentioned that consumer confidence was low. Are you seeing a rebound in home buyers returning to the market, and what do you expect to see in 2026?
Tim Samis, SVP, Real Estate Finance: Thanks, Elsa. I feel like I need to check my phone and make sure we still have, the same Prime Minister of Greenland, and Canada before answering that question, and I&#8217;m only being half facetious. It&#8217;s a good question. Straightforward question. Nuanced answer, I would say. So, Canadian real estate is very regional, and we&#8217;ve seen different levels of confidence in 2025, in different areas and for different products. So if you&#8217;re talking Toronto condos, zero confidence because there&#8217;s a 40% delta in price between new and resale. Same issue in Vancouver, albeit a little less acute. Low rise in Ontario and B.C. this year, have also been soft. Starts are down 20% in Ontario, down 5% in B.C&#8230; But the story is different elsewhere. In Quebec, starts were up 30%. In Alberta and the Prairies, starts were up 20%. In Atlantic Canada, starts are up in the mid-teens. And so, different starting point for confidence depending on where we are talking about. But, if we think about the softer markets, what&#8217;s really still held back demand has been affordability and consumer confidence. Last time I was here, rates were 50 bips higher. We&#8217;ve had a 50 bip decrease in rates. And so it&#8217;s clearly not a rate issue, it still remains a confidence issue. There&#8217;s still general anxiety around tariffs, around USMCA negotiations in 2026, around return-to-office protocols. There&#8217;s a lot of complications that people have to think about when making a home purchase. And I think it&#8217;s easier for a lot of folks to continue to sit on the sidelines, and affordability still remains a challenge. So, in Toronto, in the GTA, the benchmark price for low rise homes has actually come off 10% year-over-year, but we&#8217;re still at about $1.4 million, and that remains out of reach, unfortunately for a lot of folks. And on the high rise side, we just can&#8217;t build at a cost where there&#8217;s demand. It&#8217;s hard to build for less than a $1000 a square foot, demand’s around $800 a square foot. And that&#8217;s really why the market is, it&#8217;s frozen up. Where we&#8217;re seeing some confidence is in pockets where there&#8217;s affordable product in good locations. So, if you think stacked townhouses in Vaughan that are priced at $699,000, there&#8217;s absolutely demand for that. And clients have told us and we&#8217;ve seen projects sell out over a weekend, We&#8217;re starting to see talk of master planned communities, down zoned from &#8216;high rise&#8217; to &#8216;stacked townhouses&#8217; to take advantage of that more affordable, in-demand product. And we&#8217;re seeing more and more land serviced for affordable product, versus the big 44-ft lots for single detached. If I look ahead into 2026, I think there&#8217;s a few factors that will help improve affordability and, by extension, improve confidence. Building costs continue to come down. We&#8217;re off 20% from the peak. There&#8217;s still room to give there. There&#8217;s relief on GST for new home buyers. There&#8217;s a little bit of relief from municipalities on [development charges], and borrowing costs have decreased as well too, because of interest costs coming in. And so that&#8217;s all good. I think that should motivate buyers, but it will especially motivate first time buyers. And that&#8217;s what we&#8217;ve seen as well too. So, November-December experienced a 30% increase in new mortgage originations for first time buyers. &#8211; Wow! That&#8217;s, that&#8217;s great growth. That&#8217;s really strong growth. First time buyers are typically the catalyst for a broader market recovery because it creates liquidity in the system. So, perhaps that is a green shoot that we can be optimistic about. But realistically, I think it does take time. And that confidence takes a bit of time to cascade into the broader buying universe. And so, we still view 2026 as a transition year from a tougher, weaker market, to something hopefully better in 2027.
Elsa Hannaford: For sure. Let&#8217;s hope we can maintain the momentum. And Scott, you cover a particularly broad range of clients both geographically and in terms of scope. Is there any particular sector where you&#8217;re seeing larger signs of growth than you typically would?
Scott Brown: Yeah Elsa, I&#8217;ll start with, from a regional standpoint, growth expectations have been upgraded across most regions. Certainly Ontario, Quebec continue to be disproportionately impacted by the trade war and bright spots being Alberta in terms of, economic development there and job creation. When we talk from a sector standpoint, there&#8217;s really a number of different stories and a number of factors in play here. But service sectors are dominating the positive side of performance We&#8217;re seeing technology companies perform very well, whether it be in the AI front, whether it be in the cyber security front. And we are seeing a number of new mid-market technology companies, blossom and grow, here in Canada. Health care providers, we are seeing a strong health care sector here in Canada that&#8217;s performing quite well. And then when we look into the goods space, away from the services, certainly agribusiness and securing our food supply both here and abroad are certainly the sectors that are highlighting, leading the way for us.
Elsa Hannaford: Okay. Interesting. And Evan, you had previously said that your sector focused private equity clients were leading the charge in terms of confidence in getting deals done. Have you seen that confidence return more broadly to the market?
Evan Bennitt: So Elsa while the short answer is &#8216;yes,&#8217; in today&#8217;s environment, strategic buyers, including both corporates and PE backed firms, they continue to remain the most active. Deep expertise within their respective sectors, enabling them to invest with greater conviction, right, is a big reason for that. The sector specific knowledge doesn&#8217;t allow them just to identify and act on attractive opportunities and devote resources to higher probability opportunities, it helps them navigate potential risks more effectively, than a generalist buyer. As a result, we&#8217;re seeing a lot of activity, a lot of strong activity in tuck-in investments, where strategic buyers are acquiring businesses that complement or enhance existing platforms. So, we continue to see a, you know, a targeted approach, really driving much of the deal flow that we&#8217;re observing, reinforcing the importance of that sector focus and strategic discipline in today&#8217;s market.
Elsa Hannaford: Okay. And Tim, you touched on this already a little bit, but last time we spoke, you mentioned a few different policy changes that governments could make in order to spur housing development and improve affordability. Has any progress been made on that, including have development charges been canceled in various markets? Unlike my earlier long winded answer, the short answer is also &#8216;yes, we have seen some wins.&#8217; So, that is encouraging.
Tim Samis: GST. So, sales tax on new homes for first time buyers, up to $1 million, $1.5 million for the partial rebate, there&#8217;s relief there. Province of Ontario has followed suit as well too. And so, we&#8217;re actually talking about $130,000 of savings for a first time buyer. That&#8217;s real money. That’s meaninful, right? &#8211; That&#8217;s significant. We have seen some municipalities as well move on development charges. Region of Peel has temporarily cut their DCs by 50% if you build between now and November 2026. City of Vancouver is also temporarily cut by 20%, so those are encouraging. Province of Ontario and B.C. have also changed when DCs are collected and shifted it back from, when building permits are issued until occupancy. So that reduces some of the borrowing costs. And anecdotally, we have heard that some municipalities have sped up the approval timelines, which is all encouraging. That said, I think the general view from the industry and I share this view is that more can still be done. The bottom line is homes are just taxed too heavily in the country. at an all-in rate of close to 30%. Yeah. &#8211; Right? And as Benny Tal says, ‘only alcohol and tobacco are taxed at a higher rate than housing.’ And so, all levels of government do have a role to play in finding a solution to this. I think there was more hope that the federal budget would have done more on sales tax relief and have it extended to all buyers, not just first time buyers. The reality is, first time buyers have historically been 20% of the buying universe, and there is hope that there was going to be more infrastructure funding from the feds to provinces and municipalities, which would have given them the flexibility to address DCs. And in the absence of that, a lot of cities have been reluctant to do so, unless it&#8217;s really targeted on affordable rental or, in Toronto’s case, laneway houses. And so, we still have this model where we&#8217;re basically microfinancing public infrastructure on the backs of private home buyers, and also forcing them to fund it upfront for a 50 plus year asset, right? And we know there&#8217;s models that are more effective. We know there&#8217;s models in the US&#8230; The municipal bond market is a $4 trillion market, it allows the deferral of that funding over a 30 year period. So, there&#8217;s different models that, I think, we do need to spend more time thinking about as a country, but it takes a lot of coordination across all layers of government. And this is typically is addressed as a municipal issue. It&#8217;s not just a municipal issue. We do need alignment, coordination and leadership from all levels of government. And, you know, 150 years ago, Canada built 5000km of railway in five years through that type of alignment and coordination. We need something similar to really address development charges, and it&#8217;s important that we do because the reality is, over the next 5 to 10 years, population growth is not going to be zero. There&#8217;s still pent up demand and we can debate what the number of structural housing shortfall is in Canada, but it&#8217;s in the millions. And so we need to make sure we can continue to build at scale, reduce costs and that&#8217;s the only way to really address long-term affordability.
Elsa Hannaford: Okay. Lots to think about heading into 2026. Thank you so much everyone. That was a really insightful talk.

What’s ahead for Commercial Markets in 2026

Evan Bennitt

Senior Vice-President, Corporate Finance

CIBC Commercial Banking

Scott Brown

Senior Vice-President, Ontario & Prairies

CIBC Commercial Banking

Tim Samis

Senior Vice-President, Real Estate Finance

CIBC Commercial Banking

Elsa Hannaford

Vice President, Real Estate Finance

CIBC Commercial Banking