2019 is Expected to be Another Great Year For Commercial Real Estate in Canada
- By seoserviceusa93@gmail.com
- •
- 04 Feb, 2019
Canada’s commercial real estate market is expected to have another prosperous year thanks to the booming economy. The commercial real estate scene is benefiting from a tight supply and a reduced unemployment rate—the lowest it has been in 40 years!
The final statistics suggest that investment in commercial real estate in Canada reached a record high in 2018, beating CAD 36 billion of 2017.
Here are some of the highlights revealed from a 2018 study on commercial real estate in Canada:
Offices
·Vacancies of offices declined across most industries in Canada. This lowered the Canadian average to 11% by the end of 2018.
·The number of office spaces under construction almost doubled last year; they grew to 2 million sq m. The increase of office space in the country was led by Vancouver and Toronto. The added supply of office space will raise vacancies to 11.3% in 2019.
·Lack of space and soaring rents of downtown areas in major cities is expected to force tenants out of the city and into the suburbs.
Industrial
·At the end of 2018, vacancies in the industrial area plummeted to a mere 2.9% and are expected to decrease even more in 2019.
·Vancouver and Toronto witnessed the lowest vacancy rates of industrial real estate in all of North America. Vacancy rates for Vancouver were 1.5% and vacancy rates for Toronto were 1.3%. In 2019, Vancouver and Toronto are expected to list in the three tightest markets for industrial real estate in North America.
·In 2018, construction of industrial real estate grew from 14 million sq ft in 2017 to over 20 million sq ft.
Retail
·Real estate in retail has taken a bit of a hit as major chains have been forced to close down due to the increase of online shopping.
·Despite the rise of online shopping, discount and luxury retailers continue to grow. However, consumer spending is slowing down due to high debt and increasing interest rates.
·In 2019, landlords of retail real estate are expected to spend on making improvements to their properties. Large retail real estate spaces are expected to be converted or redeveloped to incorporate mixed-used elements like offices or housing.
Pivotal Commercial Realty has high hopes for the opportunities 2019 is going to bring to the commercial real estate environment.
If you’re looking to invest in commercial real estate (retail, industrial or office leasing) in Toronto, we can help you with site selection, negotiations, documentation and closing.
Call us today at 800-908-6718 for more information.
Before you go ahead and sign any papers to purchase commercial real estate in Toronto, spend some time learning and understanding the market.
Investors in commercial real estate have to consider the following before they decide where they want to put their money:
Interest Rates
For the first time in 7 years, the Bank of Canada increased its interest rate in 2017. The interest rate set by Bank of Canada has a direct impact of the on the cost of taking out a variable rate mortgage as well as other loans.
Fluctuations in the Bank of Canada interest rates also influences the growth of corporations and consumer spending, which impacts the demand for both residential and commercial real estate.
Investors all over the globe think of Canada’s commercial real estate market as a safe haven. Even though there is some uncertainty about the rise of interest rates, the contrast between tight supply and growing demand for real estate in the country has been a driving force in the real estate market.
The commercial real estate market continues to be viewed positively by international real estate investors with Toronto and Vancouver being the most popular destinations. In 2018, Toronto was considered one of North America’s major real estate markets to invest in. In 2019, both Toronto and Vancouver are expected to be in the continent’s top 3 destinations.
The growth in commercial real estate is being pushed by the increased sales in office buildings. Even the political uncertainty between US and Canada did not hamper the success of commercial real estate in the country.
Major Markets
In 2018, Canada’s commercial real estate sector hit a record breaking $36.2 billion. This growth can be attributed to the increasing demand of industrial, office, retail, multi-family units and ICI land.
Those looking to invest in commercial real estate in Canada should consider Toronto, Vancouver, Calgary, Montreal and Ottawa. In 2017, most of the growth in the sector was driven by office buildings but in 2018, industrial real estate led the way.
In the near future, the demand for industrial real estate is expected to rise due to the increase of e-commerce business in the country that are looking to build fulfillment centers nearby for fast and easy delivery.
The commercial real estate market in Canada is continuing to flourish. However various factors are expected to make bring changes to the landscape in the future.
2018 proved to be a record-setting year for the commercial real estate sector in Canada due to an influx of new projects and high occupancy rates. With that being said, property owners are advised to monitor fluctuations in the market. Like all real estate, the commercial real estate sector of Canada is prone to disruption.
Let’s take a look at the key disrupters in commercial real estate in Canada:
Shared Workspaces
There has been a dramatic shift in the way people work in the country. Canada is experiencing a boom in the start-up community , many of which are led by Millennials.
Traditional office spaces are being replaced with co-working spaces that are designed to enhance collaboration, allow for greater flexibility and lower operational costs at the same time. Open offices are much cheaper than conventional cubicles. Younger professionals have found a way to work with limited office space.
Landlords can’t just lease out their building to select tenants, they have to redevelop their office space so it caters to the demand of the modern workforce. This can involve offering flexible suites or open concept office spaces.