The Beaux-Arts-style Canadian Pacific Building, a historic 15-storey 1913 landmark at the southeast corner of Yonge and King streets, will soon be converted into a 162-room hotel operated under Marriott International’s Tribute Portfolio, a mid-to-upscale collection of boutique accommodations.
The property was acquired by Montreal-based developer Artifact Group this past spring. It was previously owned by H&R REIT, which initially began planning to convert the office building into condominiums in 2022.
In Canada, developers are increasingly looking toward hotel conversions as the office and condo markets have softened in recent years, says Nicole Nguyen, senior vice-president of CBRE Canada’s Hotels Valuation and Advisory Services group.
Between 2022 and the first quarter of 2025, condo sales dropped by 75 per cent in Toronto and 37 per cent in Vancouver census metropolitan areas, according to the Canada Mortgage and Housing Corporation. Inventories of unsold units have also more than doubled, with prices down by 7.5 per cent this year compared to last, says a report from the Toronto Regional Real Estate Board.
National hotel growth
Ms. Nguyen says there’s ample room for growth in hotel development, which was stalled during the COVID-19 pandemic.
Since 2020, Canada has seen hotel development growth of just 0.5 per cent annually. Prior to that, annual hotel room growth averaged 1.5 per cent or more, according to a CBRE market report.
For 2026, average daily room rates were also forecast to grow by about five per cent, the report says.
“Since we haven’t been pumping a ton of new supply into the system, occupancy rates have stayed at record-high levels,” Ms. Nguyen says. “That makes developers want to get new supply into the pipeline.”
As a result, she expects the sector to see some of the strongest hotel supply growth it has seen in years.
“Overall, the Canadian accommodation sector continues to demonstrate resilience despite ongoing economic and geopolitical uncertainty,” Ms. Nguyen adds.
As of the second quarter of this year, a record 345 hotel projects with a total of 47,874 rooms are in the construction pipeline, according to a new report from hotel market data company Lodging Econometrics. This represents a four-per-cent increase in projects and a seven-per-cent increase in rooms compared to 2025.
Ontario is leading the charge on hotel constructions with 190 projects, representing 55 per cent of the total pipeline. British Columbia also has a record high of 77 projects, representing 22 per cent of the total, up by 13 per cent from 2025.
The cities in Canada developing the most hotels include Toronto with 71, Vancouver with 24 and Niagara Falls, Ont. with 41.
Improving a hospitality portfolio
The Canadian Pacific Building at 69 Yonge St. in downtown Toronto housed the offices of the Canadian Pacific Railway, now part of CPKC, until 1988.
Since then, H&R REIT acquired the building before Artifact Group bought it in April 2026, with the intention to turn it into a luxury Marriott hotel.
“The property will be repositioned through an adaptive reuse strategy into a 162-key lifestyle luxury hotel under Marriott International’s Tribute Portfolio brand, with a focus on design, wellness and elevated guest experience,” says Gaurav Gupta, Artifact Group’s president.
Details of the redevelopment, which is being planned by Giannone Petricone Associates Inc. Architects with interior design by Montreal-based Ivy Studio, have not yet been announced. However, Artifact Group expects renovations to begin in early 2027, with an anticipated opening in 2028.
The project is Artifact Group’s first in Ontario, complementing the company’s recent expansion of its Quebec hospitality portfolio with the acquisition of the 595-room, four-star DoubleTree by Hilton Montreal Downtown Hotel – a major part of the Complexe Desjardins shopping complex in the city’s Entertainment District.
Hotels intersect with residential development
Ms. Nguyen cautions that the speed of the hotel development pipeline will be dependent on the recovery of both the residential and commercial real estate markets.
While Vancouver and Toronto land values have dropped from their peaks a few years ago, they haven’t declined enough to make building an urban hotel profitable enough to support construction costs without some kind of additional residential component, she says, making it even more attractive to convert existing buildings into hotels.
Downtown Toronto hotels sometimes include residences for sale or rent.
Among recent examples, one includes Nobu Hotel Toronto, which opened last year atop the west tower of a 700-unit condominium building, designed by Teeple Architects and Turner Fleischer Architects. The new luxury hotel incorporates the façade of the former Pilkington Glass factory on Toronto’s Mercer Street.
The 224-room Le Méridien Toronto Pinnacle Hotel by Marriott is also scheduled to open later this year, occupying the bottom 12 floors of the 106-storey SkyTower condominium complex at Pinnacle One Yonge.
Amid the condo market slump, some developers have cancelled or delayed project construction starts since they were not able to sell at least 70 per cent of units beforehand – the threshold required to obtain construction financing from lenders.
But even if the real estate market recovers suddenly, the flow of new projects through the pipeline won’t immediately surge, Ms. Nguyen says.
“To get any new development approved and completed in Toronto takes a minimum of five years, so even if things were to magically rebound tomorrow, substantial openings are still several years out from today,” she adds.
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