Dream Industrial REIT joint venture banks on last‑mile rents, fragmentation to boost long‑term CPP returns
Canada’s industrial stock per person is the same today as it was 10 years ago, despite new demand from e‑commerce, population growth and supply chain changes.
“It just highlights how difficult it is to add supply in this market,” said Alexander Sannikov, president and chief executive officer of Dream Industrial REIT.
In December 2025, CPP Investments agreed to form a joint venture with Toronto‑based Dream Industrial Real Estate Investment Trust and Dream Asset Management Corporation to acquire Canadian last‑mile industrial assets.
The JV starts with 12 properties totalling about 3.6m square feet across Ontario, Quebec, and Alberta, acquired for $805m.
The partners have committed $1.1bn of equity capital, including $1bn from CPP Investments, giving capacity to acquire about $3bn of industrial assets in major Canadian markets.
Dream Asset Management will act as asset manager, and a Dream Industrial subsidiary will provide property management and leasing services.
CPP Investments manages about $114bn in assets across Canada, with holdings spanning hundreds of companies in sectors including technology, financial services, natural resources, renewables and infrastructure.
Across Canada’s largest cities, the most valuable warehouses are those embedded in dense urban areas, where land is scarce, new supply is difficult to build and customers are nearby.
Dream has assembled one of Canada’s largest industrial platforms in these constrained markets over more than three decades, as population growth concentrates and barriers to new development stay high.
Last‑mile assets have become one of the most sought‑after segments of Canadian real estate.
Growth in e‑commerce, faster delivery expectations and population expansion in major metropolitan areas have contributed to a structural increase in demand.
Most new construction, however, has occurred in large, peripheral big‑box warehouses.
Urban infill warehouses – typically under 100,000 square feet and located within established city nodes – remain harder to secure.
Land scarcity, zoning restrictions, and high replacement costs make adding new supply a challenge, and infill development is often materially more expensive than suburban alternatives.
CPP Investments described the market backdrop as supportive of resilient income and downside protection for long‑term investors.
Canada ranks among the strongest in the G7 for projected GDP and population growth, while warehouse vacancy rates remain comparatively low in major urban markets—about 5.5 percent nationally as of the third quarter of 2025, with tighter conditions in Toronto and Vancouver.
Economic growth and population expansion are clustered in a handful of dense metropolitan corridors, which limits where new industrial space can be built, especially in urban infill locations.
The market is fragmented: the top 35 owners control about one‑third of national inventory, leaving a substantial portion of assets in private or family ownership.
CPP Investments sees this as an opportunity for patient institutional capital to aggregate assets, professionalise management and unlock embedded value over time.
Strong rental rate growth in urban industrial markets has created “meaningful embedded mark-to-market potential”.
In the initial Dream portfolio, many tenants are paying rents estimated to be roughly 25 percent to 30 percent below today’s market rates.
CPP Investments emphasised that multi‑tenant urban industrial requires active leasing, local market knowledge and disciplined capital improvements.
Dream’s platform, spanning tens of millions of square feet across Canada, provides the operating depth to support lease management, repositioning and targeted upgrades.
Sophie van Oosterom, managing director and head of real estate at CPP Investments, said Dream “brings a national platform” and strong relationships in Canada’s major urban markets.
She said the partnership matches CPP Investments’ long-term capital and global perspective with Dream’s local operating expertise in multi-tenant industrial.
