It’s been a good year for Canada’s commercial real estate sector with investor activity and consumer appetite increasing during the year.
"Canadian commercial real estate has proven to be an attractive asset class for various investment groups recently, a trend that will continue into 2019," said Keith Reading, Director of Research, Morguard. "Over the past 18 months, investors placed capital into the market with confidence, resulting in record-high sales volume.
Morguard’s 21st annual Canadian Economic Outlook and Market Fundamentals Report shows indicators for a strong year ahead for the CRE market.
“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," added Reading.
Which assets are leading?
Among the highlights for 2018, multi-suite residential saw a record-high flow of capital and this is expected to continue into 2019.
Average monthly rents are expected to increase amid continued low vacancy rates across Canada, especially as demographic and population shifts will drive demand.
This demand, coupled with low construction activity, will make multi-suite a very attractive asset for investors, Morguard says.
Other asset classes also posted record high levels of investment in 2018 including offices and retail.
Industrial trends were positive and the class performed best overall in 2018.
Strong economy to support CRE growth
In summary, the report says that “Canada's economy is forecast to expand at a fairly solid rate, which will translate into continued labour market progression and increased 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.”