By all current indications and trends, interest and investment volume in Canada’s commercial real estate market will enjoy a strong 2019, a new report from Morguard Corporation assured.
In its 2019 Canadian Economic Outlook and Market Fundamentals Report, Morguard stated that the commercial segment’s attractiveness to a wide range of investors will remain its key feature well into the next year.
“Over the past 18 months, investors placed capital into the market with confidence, resulting in record-high sales volume. The market shows no signs of slowing, as investors continue to show interest in core and core-plus quality properties with strong tenant profiles in Canada’s major urban centres – while site intensification and repositioning opportunities continue to shape the Canadian real estate landscape,” Morguard director of research Keith Reading said.
Among the main drivers of this strength would be the Canadian economy, the steady expansion of which will foster a healthy labor market and growing consumer spending.
“Sustained economic expansion over the next few years bodes well for the Canadian commercial real estate sector as a service provider to the economy. Canadian commercial property sales activity will remain robust over the near term, against a backdrop of positive overall sector performance,” Morguard explained in its report brief.
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Demand will continue to outpace supply in the top-performing office and industrial sectors.
“For the office asset class, the mature phase of the cycle was extended, resulting in a record high pace of investment during much of 2018. Industrial property investment trends were also generally bullish, as the asset class placed first in terms of market performance during 2018.”
Capital flow into the multi-suite residential segment, which reached new heights this year, will remain healthy in 2019.
“The national vacancy rate is expected to hold at or near the cycle low, resulting in modest upward pressure on monthly rent averages. Demographic shifts, housing conditions and migration patterns will continue to boost rental demand, while low levels of new construction activity will provide little relief from the shortage of vacant units available for prospective renters.”
Retail spaces, which remain among the heaviest hitters in terms of consistent performance, will also enjoy a good 2019 despite mixed leasing volume and greater industry risks.
“While retail sales growth continues to moderate, properties with development or repositioning potential are expected to generate strong interest among the investment community looking ahead to 2019.”
Construction is due to begin by the end of 2019.
Article by Ephraim Vecina 22 Nov 2018
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