Canadian Commercial Real Estate – A Seasoned Investor’s Best Kept Secret
- By seoserviceusa93@gmail.com
- •
- 02 Jan, 2019
Politics today isn’t too different to a circus. World leaders have resorted to making extravagant promises to win votes and later are hit with reality.
Because the business climate is so volatile at the moment, investors have turned to the one industry they can rely on – Canadian commercial real estate.
Despite keeping a low-profile, commercial real estate has been that one industry that property investors can count on. It presents numerous investment opportunities that have proven to be lucrative year after year. In September 2018, commercial real estate investments reached a record high in Canada.
In an industry that is so cluttered, it can get tough to differentiate between facts and rumors. The truth of the matter is that commercial real estate in Canada has been rewarding investors for decades and today when the US market is experiencing political upheaval, Canada has become a safer alternative.
If you’re looking for prosperous investment opportunities, here’s why you should look into commercial real estate:
1.Strong Economic Conditions
The Canadian dollar is slightly undervalued so foreign investors from countries are able to accrue an exchange benefit that they wouldn’t get from investing in other countries. Like in other countries around the world, interest rates are expected to increase in the coming years but the Bank of Canada has stated that the increments will likely happen slowly.
2.Multi-Cultural Country
Canada is known for its diversity. According to statistics, about 40% of the residents of Toronto were born outside the country. In such a diverse country where every other individual has a different background, foreigners are bound to feel at ease. Assimilating to Canada is much simpler than it is to adapt to other countries around the world including the USA.
Foreign investors can easily educate themselves about socio-economical conditions in the country.
It helps for new investors to stay updated with major trade deals the country is involved in such as the USMCA aka “the new NAFTA” to have an idea about the major policies.
3.Stable Political Climate
Political turmoil hasn’t yet caught up with Canada and there’s a good chance that the country weathers the storm happening in other parts of the world.
As of yet, Canada’s political climate remains stable. Canada’s leaders have always valued stability and this will probably continue in the future too.
Compared to the US and countries in the Europe, Canada is a safe haven for residents, businesses and investors too.
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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.