4 Key Disrupters in Commercial Real Estate in Canada
- By seoserviceusa93@gmail.com
- •
- 08 Feb, 2019
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.
Online Retail
For the longest time, the retail industry was wondering whether online shopping can actually replace physical stores. Physical shopping malls and boutiques may not have completely disappeared but they have definitely decreased; e-commerce retail is proving to be a major threat to traditional shopping outlets.
According to studies conducted by eMarketer, the sales of online retail outlets increased by around 30% in 2017 but industry experts have found that an omnichannel business model is most effective when in the retail sector.
Property owners in the retail sector should brace themselves for the shift in demand in the retail sector. There’s a need for property owners to work collaboratively with their tenants to create spaces that pull people out of their houses and into the stores.
The Growing Demand for Industrial Real Estate
Industrial real estate in Canada has the lowest vacancy rates (especially cities like Toronto and Vancouver) and the demand for industrial real estate is at an all time high. The need for industrial real estate in Canada is expected to rise in the very near future, so there’s a lot of potential for new developments in the sector.
E-commerce is the driving force behind the demand for automated distribution centers that provide quick access to major urban locations. For e-commerce businesses, quick response and fast-delivery are key differentiators.
Commercial property owners can protect themselves against fluctuating market conditions by diversifying holdings.
Digital Technology
The invention of digital technologies like lease management software can help property managers grow and manage their businesses more efficiently. They can also use virtual reality site tours allow them to reach out to new tenants.
If you’re interested in investing in commercial real estate in Toronto, contact Pivotal Commercial Realty. We’re office leasing agents, with a team that can assist you with site selection, negotiation, documentation and more. 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.
