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Canadian CRE Investor Portfolios Strengthen with Multifamily Real Estate

The Canadian Commercial Real Estate (CRE) market seems stronger than ever, despite all the ongoing pandemic challenges.

New opportunities to strengthen investment portfolios continues to be available for Canadian CRE investors. Multifamily real estate properties are some of them.

Canada’s Housing Market Is Hot!

When COVID hit, many experts predicted a decline in home prices across Canada, some saying they would decrease by up to 18%. But it seems, Canada’s housing market is going as strong as ever.

Canada’s housing prices have already been high, but no one expected them to reach new record highs during the pandemic; Increasing by 13.5% in the past year and reaching a $676,600 benchmark in January. Interest rates have jumped lower though, which is excellent news for people looking to borrow funds to buy a home or invest in commercial real estate.

Supply and Demand for High-Rise Multifamily Properties Stays High

Multifamily properties have always been considered a smart and profitable investment. These days, a growing number of Canadians are looking for well-located, high-rise multifamily properties to live in, especially those with energy-efficient programs.

That’s why many CRE investors are currently focusing on those properties to meet the high demand with an even higher supply.

https://www.redevgroup.com/news-article/multifamily-real-estate-strengthens-cre-investor-portfolios-in-canada

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The Future of Offices and Malls in Canada

No other sector was quite as affected by the COVID-19 pandemic as office and retail. Imposed business closures, shorter working hours, requirements for working from home, and social distancing restrictions disrupted the two sectors and completely altered their daily processes.

While many are skeptical about just how soon things will return to normal, some industry leaders share a positive outlook about people returning to work in offices and shopping at the mall.

Canadian businessman and CEO of Brookfield Asset Management, Bruce Flatt, shares his views on what the future holds for office and retail.

The Combined Power of Online Trading and Physical Store Presence

Although many businesses struggled and are still struggling, the e-commerce sector underwent massive growth during the pandemic. With most Canadians turning to online shopping in the face of business closures, e-commerce in the country took off.

But the future of retail doesn’t lie solely in the digital world. According to Flatt, shopping malls and retailers need to focus on creating a balance between online trading and physical store presence.

We’ve already seen several examples of just how beneficial the combination of online and offline presence can be. Shopping malls and retailers across Canada showed great ingenuity during the pandemic by offering online orders with curbside pick-ups. Several stores began offering local deliveries to loyal customers or partnering with Uber Eats and similar services to connect with their shoppers.

Other industry leaders and Canadian retail CRE investors believe diversification is the key to success in the post-COVID world. Mixed-use spaces are increasingly on the rise, proving to be some of the most lucrative investments in the long run.

Read more at https://www.redevgroup.com/news-article/the-future-of-offices-and-malls-in-canada

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Best Space Use Models for CRE Properties During & After COVID19

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Due to COVID-19 health concerns, many businesses across Canada are operating at a limited capacity. Some provinces in the country, just this month, closed non-essential stores to prevent the further spread of the virus.

That accelerated the growth of online shopping, takeout orders and the need for more delivery service. Now retailers and CRE property owners are facing a more significant challenge – what to do with their empty or limited retail space?

Here are some of the best space-use models retailers are using right now.

Industrial is the new Retail. Retail is now Office. Restaurants are kitchens-only.

Mixed-use properties have always included retail, but now retail spaces themselves are becoming more mixed-use.

Not only are retail mall spaces converting to warehouse use, but retail centres are also welcoming office workers to help businesses with high workplace density. Many are turning their retail space into medical offices, research centres, daycare centres, self-service grocery stores, and more.

When it comes to food, people now mostly rely on delivery services and takeouts. Thus this is causing restaurants to make the switch to the ghost-kitchen model, where they only use the kitchen space to make food and prep food for delivery.

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High Expectations for 2021 in the Canadian CRE Market

With 2020 in the rearview mirror, Canadian CRE investors and business leaders are looking forward to a possibly brighter future in 2021. The COVID-19 pandemic had an immeasurable impact on the global economies, affecting people and businesses of all types and narrowing profit margins for all.

However, with the introduction of the vaccine, we’re looking at CRE market stabilization and a slow return to normal. Lets take a look at the expert 2021 forecast by Avison Young of what this year may bring to the multi-family, office, industrial, and retail sectors and what this means for Canadian CRE investors.

Multi-Family Property Types Favored by Investors

Canadian investors have long favored multi-family properties as they involve low risk and high reward. Despite the pandemic and the accompanying uncertainty associated with employment and the economy, multi-family property types have remained in good standing.

The demand for these properties remains high throughout Canada, and the expectations of this trend is expected to remain high well into 2021. With the support of the Bank of Canada and the imposed decision to keep interest rates at 0.23% by 2023, investments in multi-family properties are on the rise.

Offices Under a Question Mark

The office sector was severely affected by the imposed measures to contain the COVID-19 pandemic. There was an increase in work-from-home (WFH) orders, and businesses with office expansion plans had to put them on hold.

Avison Young analysts forecast that we could see fewer employees choosing to return to office (RTO) everyday, even after the pandemic’s been dealt with. The idea that traditional workplace models returning is not likely for many businesses, as WFH has proven to bring unique benefits.

Furthermore, even with office supply being high right now, demand remains low. There are some tech companies making large space commitments in major hubs (Vancouver, Ottawa, Montreal and Toronto), while simultaneous issuing indefinite WFH plans and putting space up for sublease.

As of third quarter of 2020, the national vacancy for office was 10.9% and it is forecasted that that will rise in 2021 to 12.0% by year-end. The unknown continues to be if tenants will RTO or WFH post-COVID.

Continue reading at https://www.redevgroup.com/news-article/high-expectations-for-2021-in-the-canadian-cre-market-

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Oxford Properties Newest $2.0 Billion Mixed-Use Complex Coming to Toronto

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The Canadian commercial real estate (CRE) market’s growth doesn’t seem to be slowing down. According to several sources, Canadian CRE executives are optimistic about 2021. A survey by PwC/ULI shows that 83% of the Canadian respondents believe that 2021 will be an excellent year for real estate investments, as oppose to 55% of the US respondents.

This is why one of the latest of the numerous CRE investments comes from Oxford Properties, a Canadian multinational corporation investing in real estate, development, and property management.

Oxford’s plan is to redevelop the Canada Square in midtown Toronto by enriching it with a massive mixed-use complex. The $2.0 billion Canada Square project started in 2017, but just recently got the green light and could begin construction in 2023 if everything goes to plan.

Meeting the Growing Demand for Multi-Family Housing

The corner of Yonge Street and Eglinton Avenue has become known as the “Young and Eligible,” thanks to a surge of young people flocking to the neighborhood in recent years. It’s one of the liveliest parts of midtown Toronto, where new residential and commercial units keep popping up.

The ongoing pandemic has lowered the demand for urban living a bit, but it’s bound to spike again once the pandemic is over. Oxford and its partners are confident it will, given their $2 billion bet on urban living.

Still, the demand for multi-family housing remains high, as most people are now working from home. The new mixed-use complex with four residential towers will successfully meet the demand for dense downtown living.

The community space will accommodate many useful amenities, such as a public plaza, a central courtyard, parking garages, and a bus depot. It will also accommodate many community services, including a recreation centre and a daycare centre.

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Canadian Commercial Real Estate Trends to expect in 2021

As 2020 draws to a close, Canadian CRE investors are anxiously awaiting to see what market conditions they could expect in the upcoming year. The COVID-19 pandemic has had an unprecedented impact on businesses across industries, and the resulting increase in vacancy rates has caused concern among Canadian retail CRE investors, landlords, and tenants. But these vacancies might only be temporary. With the introduction of the COVID-19 vaccine, the future of Canadian CRE is looking bright.

Two Possible Outcomes for the Office Sector

The office sector was perhaps the most heavily impacted by the health crisis. Social distancing measures have pushed businesses to adopt new technologies and enable work from home in order to continue their operations. The efficiency and cost-saving benefits of remote work have proven to be life-saving during these trying times.

As such, when it comes to the office sector predictions for 2021, expert opinions are divided. We have some experts who states that work from home is the new normal. The benefits of it are too great to overlook and businesses will stand to gain a lot from it, pandemic or not. However, on the other hand, we have those who believe that work from home is just a temporary trend, and we’ll go back to the way things were as soon as the COVID-19 vaccine is distributed. In all likelihood, the office sector in 2021 will have to accept a compromise. Work from home will continue, but not to such a great extent as in 2020. Businesses will be flexible, allowing for both remote and on-premise work.

Suburban Canadian CRE Market on the Rise

Major downtown markets in Canada have seen the biggest rise in vacancies, as was expected. Businesses with more space than needed had to downsize, while those with expansion plans had to put their expansion plans on hold. That has caused a paradigm shift that could prove beneficial to the Canadian CRE market, as many businesses have started expanding in suburban areas and provinces; such as, Alberta and Saskatchewan. More affordable, lower density locations are driving business growth outside Canada’s largest cities. These suburban locations are attracting business leaders and investors and creating new opportunities for local communities.

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2021 Looks Bright for the Canadian CRE Sector

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The Canadian CRE sector has been growing for years, managing to remain strong despite the ongoing pandemic. According to Andy Warren, a PwC real estate research director, Canada’s CRE executives are highly optimistic about 2021 as well.

In collaboration with Urban Land Institute (ULI), PwC conducted a survey on emerging real estate trends. Here are some of the most important findings from their report, which show that 2021 will be an excellent year for Canada’s CRE sector.

The Most Promising Commercial Real Estate Niche Assets

Canada’s most promising CRE niche assets include mixed-use commercial properties, single-family rentals, self-storage, life sciences, and production studios.

Mixed-use properties that combine retail with medical office, with traditional office or with housing will continue to thrive.

The single-family rental sector is expected to grow mostly because of the rise of remote work. People are looking for bigger properties to accommodate their home offices.

Many of those living in smaller multifamily and single-family homes are struggling with space, which is why the need for self-storage facilities is likely to grow in 2021.

Investing in life sciences will also remain strong next year, primarily due to the ongoing vaccine development for COVID-19.

Given the increasing demand for online streaming services, investing in production studios for TV and film will be quite profitable, too.

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New Real Estate Trends Are Coming; What to Watch Out for in 2021

Even with the COVID pandemic going on Canadian real estate market continues to develop and grow. Particularly the retail CRE (commercial real estate) sector has experienced significant growth during this year, many investors see a large potential for profit within Canada.

It’s no secret the pandemic has impacted the market unexpectedly but this is a chance for room to be made for new trends focusing on resilience and specific strategies. According to the Urban Land Institute research and PwC Canada, these are the upcoming real estate trend for 2021 within Canada that everyone should watch out for.

15-Minute and 18-Hour Cities Being Built

More people are looking at remote work and more companies are opening up to the idea, and with this allows Canadians to live anywhere they like. People are looking at suburban and rural areas to move into affordable housing, now that commute time isn’t a factor, to get away from the densely populated cities.

This is helping to grow a trend of 18-hour cities, which are medium-sized cities that have higher than average population, jobs, wage growth, higher cap rates, along with a lower cost of living and doing business. 15-minute cities are also on the rise, the concept is that everything a person needs for daily life; work, grocery store, school, and more are fully accessible within 15 minutes, either by walking or biking.

These city types both pose excellent real estate opportunities, especially because they have massive growth potential.

Developing Suburban Offices

With the rise in remote work, suburban offices can potentially become the new normal for many in 2021. According to PwC Canada, 34% of employees prefer to be working from home, while 37% of employees prefer being in the office.

Everyone wants to work a bit closer to home, and this might be a wish come true. More Canadian companies that can afford remote working are reassessing their properties and looking more at the development of suburban office spaces.

Increasing Warehouse Space

With the pandemic going on and many stores closed online shopping has had a huge increase and many retailers are looking into investing in more warehouse opportunities.

Some investors and realtors seem to have found a potential solution; taking the excess space in shopping malls and repurposing it for distribution, warehousing, or other purposes. Many are even looking at grocery malls for this especially.

Medical Office Space and Repurposing Shopping Malls

Telehealth in Canada has seen an increase during COVID, particularly within the senior population. But nevertheless, there is still a need for physical space. Plenty of healthcare centres while going digital are looking into repurposing their medical office space.

Countless shopping malls that had high foot traffic are also repurposing space and moving to bring in various healthcare functions, as hospitals struggle with space.

Summary

There have been some major shifts from the pandemic affecting how we use commercial real estate. Plenty of mixed-use and retail CRE opportunities will continue to be available in 2021.

Canadians Kickstart Holiday Shopping Early This Year

Although we’re still a couple weeks shy of the holidays, Canadians are already feeling the holiday spirit.

Gift shopping is in full swing as more and more people are visiting their local malls and plazas, no doubt with the intention of beating the holiday rush.

Not to be outdone, retailers are restocking the shelves and going all out with their marketing gimmicks to drive shoppers to their doors.

‘Tis the season to think ahead!

Retailers Are Reimagining Their Holiday Strategies

That’s right! All over, we’re noticing retail giants accelerating their holiday plans to evolve in a year that has been completely transformed by the pandemic.

The trend is two-fold. Some retailers are going full throttle on attracting buyers early to their stores whereas others are spending their dimes on online storefronts.

What safety precautions are physical in-store retailers taking these holidays to protect their patrons?

For one, we’re seeing the mandatory use of PPE for both clerks and customers, and the installation of hand sanitization stations at key entry and exit points.

Some are even going so far as to build queue shelters outside for people during the rain, wind and snow.

That being said, the anxiety of lower revenues this year as a result of fewer impulse purchases and financial drawbacks are a concern for many retailers.

Canadian Shoppers Still Seem to Love In-Store Shopping

PwC Canada’s 2020 Holiday Outlook still estimates that 59% of Canadian consumers will complete their holiday shopping in-stores this year.

One potential reason?

Most of these shoppers belong to the 55+ year age group, and 60% of whom are planning to drop by a physical store to purchase at least 3/4 of their gifts.

As for Gen X and Gen Z, 45% and 50% respectively are planning to complete their holiday shopping from a physical outlet.

Online Shoppers Are Still Expecting Curbside Pick-up at the Outlet

33% of online shoppers are still gravitating towards curbside pickup. The reason? Greater convenience. Shoppers don’t want to have to wait even 1 or 2 days more for their packages to arrive.

This way, they still get their stuff early, while beating the in-store rush.

Retailers Need to Evolve to the COVID Way of Life

It’s natural that retailers who resist change in the face of this pandemic will struggle to turn a profit.

The strategic ones who pivot in time will experience immense success and survive during this daunting year of uncertainty.

To Recap

The holiday shopping season is well underway in Canada, however, most stores and patrons are keeping health and safety at the forefront.

Retailers are moving to adapt their stores to survive during these uncertain times. Even the smallest of strategic changes can help them close the gap in revenues that will arise due to the pandemic.

While most shoppers are sticking to physical shopping, we’re also seeing a growing trend of online stores that have enforced interesting marketing tactics to entice the wary shopper.

For more information, please visit:

https://www.redevgroup.com/news-article/holiday-shopping-season-in-canada-starting-early-this-year

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Wal-Mart Canada Breaks into Vaughan Distribution Centre – Expected Completion: 2024

Walmart has been growing within Canada for a while now, consistently grabbing new commercial real estate “CRE” opportunities all over the country. With how Wal-Mart’s Canadian portfolio seems to grow every day, this is great news for their further growth. New brick-and-mortar and online stores are coming up out of the woodworks everywhere to bring the best experiences to customers.

The newest distribution centre, located in Vaughan, Ontario, is another store in the chain making up more than 400 stores Canada-wide.

Breaking Ground with Condor Properties

Condor Properties, a local Vaughan real estate developer has teamed up with Walmart Canada to make this happen. Condor Properties boasts more than 100 diverse real estate properties in the Toronto area and the surrounding towns and cities.

The ground-breaking ceremony for these two partners’ and their new 550,000 ft2 Vaughan distribution centre was just held in August 2020. The project is expected to provide hundreds of jobs not only when the building opens and retail positions are available, but also job opportunities for local construction workers to build the facility.

The target location is at 11110 Jane Street. Not so far from residential and shopping areas so customers will be able to shop for any food or merchandise their hearts desire. It’s estimated that over 70 million products will be on the shelves coming from over 3,000 renowned suppliers, which far exceeds any other Walmart store that Canada offers so far.

The CEO and president of Wal-Mart Canada, Horacio Barbeito, couldn’t help but express his excitement about the project during the ceremony in August, saying: “These are challenging times for everyone, but we are investing for growth because we believe in Ontario and Canada’s future are proud to do business in this great country.”

The project aims for their slated completion in 2024.

Other Wal-Mart Canada’s Investments

Wal-Mart isn’t just working on this new storefront, they are set up to build many other distribution centres all throughout Canada, and some of are already in the process of development.

One such example is the new centre in Surrey, British Columbia, another grand project that aims to provide much more of Wal-Mart’s products with its 300,000 square feet of space.

The Wal-Mart distribution centre though, like the one in Cornwall, Ontario; has new plans to move towards renovating it. The upcoming improved centre will have more automated systems to help with managing health and beauty products, general merchandise, apparel, and more.

Retail investment of $3.5 Billion will benefit Canada

Only about a month ago, Wal-Mart Canada announced its newest five-year investment plan that is seen to be worth a whopping $3.5 billion, this will help Canada grow and prosper even further.

One of the things included in the plan is constructing more distribution centres and working to upgrade more than 150 of the already existing facilities to upgrade the shopping experiences to Canadian consumers and make it better.

The brick-and-mortar stores will be upgraded and made to work much smarter with digitization, and also adding new bigger self-checkouts. They will also start to introduce much more merchandise pick-up services, as well as hybrid locations for both a faster pickup and delivery for everyone.

This isn’t all though, they have the goal of having stores employ robotics and computer vision cameras to reduce any touchpoints; which helps to increase efficiency and accuracy.

Summary

Canada, and particularly Ontario, offers great potential in developments within retail commercial real estate, and it’s being recognized by many investors such as Wal-Mart. As Wal-Mart’s Canadian continues to grow, all of Canada’s consumers will have a much more efficient, faster and enjoyable shopping experience – both online and offline in-store.

The retail company aims to also make full use of the newest and best technology to help enhance Canada’s growth, partnering with a number of high-tech companies in the country.

Learn more about this and Walmarts growth in Canada here:

https://www.redevgroup.com/news-article/wal-mart-canada-breaks-ground-on-the-vaughan-distribution-centre