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The year 2020 brought a lot of uncertainty to the Canadian CRE market, especially in urban centers like Edmonton, Toronto, Victoria, and Regina. Several sectors have experienced heavy losses during the COVID-19 lockdowns, but many more have proven to be exceptionally resilient.

Industrial and multi-residential markets across Canada fared surprisingly well, while office and retail sectors are only now starting to show signs of life after a challenging year.

To gauge what is to come in Canadian CRE markets, four panellists met up to discuss current and future trends in the industrial, multifamily, office, and retail sectors. Take a look at their expert insights.

Industrial Sector the Top Performer 

The pandemic has pushed businesses to embrace e-commerce and turn to online orders and deliveries to make ends meet. Unsurprisingly, this paradigm shift has resulted in a significantly increased interest in industrial solutions like warehousing.

Throughout 2020, the industrial sector has proven to be the most resilient one, making it the safest income-producing investment. The demand for industrial CRE is far outweighing the supply, forcing rents to go up for all quality solutions. The trend is expected to continue, driven in part by the rising shift to e-commerce and Amazon’s aggressive Canadian expansion plans.

Office Sector Recuperating 

The office sector has fared slightly worse at the start of the pandemic, but it has quickly recuperated. Allied Properties REIT had virtually no tenant failures in 2020, performing an astonishing 258 lease transactions last year, almost half of which were with new tenants to their portfolio.

While early spring in 2020 disrupted the office sector, things started returning to normal by late fall. It is expected that 2021 will bring no new disruptions as businesses slowly return to offices, so the future is looking bright.

Continue reading at https://www.redevgroup.com/news-article/industrial-multifamily-office-retail-what-is-going-well-

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

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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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.

Read more at:
https://www.redevgroup.com/news-article/oxford-properties-developing-a-20-billion-mixed-use-complex-in-toronto

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. 

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