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Commercial Rent Trends in Canada: What to Expect for the Balance of 2023

Staying updated with real estate market happenings isn’t an easy task, especially at a time when things are changing day to day. Similar to the residential market, the commercial market is currently going through major shifts that will impact the rest of the year.

For your convenience, we’ve rounded up some of the most important commercial and retail rent trends in 2023.

Changing prices

In the wild world of commercial real estate, a major trend has emerged that has left both buyers and sellers scratching their heads: pricing discrepancies. Owners are demanding top dollar for their properties, while buyers and tenants are hesitant to pay the steep prices. This trend is particularly pronounced in sales, but it’s also affecting leasing.

The trend is due to many factors, including interest rate increases, high inflation, and global geopolitical uncertainty. This uncertainty is causing everyone to be cautious, prolonging the process of determining the true value of a property.

Not all segments of commercial real estate are experiencing the same pricing problem, however. Industrial properties remain hot commodities, with near-zero vacancy rates driving up competition and prices in Toronto and Vancouver. Meanwhile, office properties are still in flux as companies struggle to determine their post-pandemic office needs. As a result, there has been an uptick in office subleases hitting the market.

Earlier (in December), Shopify caused a stir when it announced that it wouldn’t be using its new 348,000-square-foot office space in downtown Toronto and would instead be subleasing it. This could be a trend we expect to see more of in the future, although its prevalence will vary across industries. Despite this, some large companies like Deloitte and Google have recently expanded their Canadian office space.

On the retail front, the segment has made significant strides since pandemic measures have eased and in-store shopping has resumed. However, investors are still trying to find ways to compete with the rise of e-commerce and entice shoppers back to physical stores.

Which areas are affected the most?

According to CBRE’s Canada Retail Rent Survey, rent prices in the Western provinces saw the most extensive increase, as all cities located west of Winnipeg reported at least two rent hikes. The cities of Saskatoon and Vancouver were the most affected, with six of their key urban areas experiencing a rise in rental rates.

Demand for high-tech properties

Another trend we can currently see in the commercial property market is a shift towards high-tech features, such as property technology, that prioritize environmental sustainability, social responsibility, and cybersecurity. In the realm of office spaces, companies are looking for setups that can cater to remote workers and accommodate desk hoteling.

Staying competitive in this fast-changing landscape requires adapting to evolving market conditions and client needs, but rather than being intimidated by the idea of constant change, you should approach it as an opportunity for growth. In fact, times of uncertainty often provide the best lessons and potential opportunities.

Differences between investors

In the market, we now see a clear divide between those who have ample capital and those who don’t. While some investors are strategically waiting for the right opportunity, others are struggling to move their projects forward due to rising interest rates and tighter borrowing requirements.

However, financial hurdles, such as mounting construction and labour costs, are posing a challenge for all developers. This is something that should be taken into account for the rest of the year.

But don’t let this discourage you. To overcome these obstacles, it’s important to think outside the box and get creative with your financing and project costs. This could mean offering more free rent, providing more tenant inducements, or even lowering rent escalations to entice tenants. In short, those who can adapt and be inventive will be the ones who succeed in the real estate industry, as history has shown.

Although Canada is still facing economic challenges, the retail industry and its members are optimistic as they head into the new year – this is another key finding of the Canada Retail Rent Survey.

2023 – a promising year for the multi-suite residential rental sector

At the beginning of the year, Morguard released its Canadian Economic Outlook and Market Fundamentals report for 2023. According to it, things are looking optimistic for the multi-suite residential rental sector. That doesn’t come as a surprise since the market remained steadfastly confident throughout 2021 and 2022, despite the heightened risks.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

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Media

Commercial Rent Trends in Canada (2023 Updated)

Staying updated with real estate market happenings isn’t an easy task, especially at a time when things are changing day to day. Similar to the residential market, the commercial market is currently going through major shifts that will impact the rest of the year. For your convenience, we’ve rounded up some of the most important commercial and retail rent trends in 2023.

Changing prices

In the wild world of commercial real estate, a major trend has emerged that has left both buyers and sellers scratching their heads: pricing discrepancies. Owners are demanding top dollar for their properties, while buyers and tenants are hesitant to pay the steep prices. This trend is particularly pronounced in sales, but it’s also affecting leasing.

The trend is due to many factors, including interest rate increases, high inflation, and global geopolitical uncertainty. This uncertainty is causing everyone to be cautious, prolonging the process of determining the true value of a property.

Not all segments of commercial real estate are experiencing the same pricing problem, however. Industrial properties remain hot commodities, with near-zero vacancy rates driving up competition and prices in Toronto and Vancouver. Meanwhile, office properties are still in flux as companies struggle to determine their post-pandemic office needs. As a result, there has been an uptick in office subleases hitting the market.

Earlier (in December), Shopify caused a stir when it announced that it wouldn’t be using its new 348,000-square-foot office space in downtown Toronto and would instead be subleasing it. This could be a trend we expect to see more of in the future, although its prevalence will vary across industries. Despite this, some large companies like Deloitte and Google have recently expanded their Canadian office space.

On the retail front, the segment has made significant strides since pandemic measures have eased and in-store shopping has resumed. However, investors are still trying to find ways to compete with the rise of e-commerce and entice shoppers back to physical stores.

Which areas are affected the most?

According to CBRE’s Canada Retail Rent Survey, rent prices in the Western provinces saw the most extensive increase, as all cities located west of Winnipeg reported at least two rent hikes. The cities of Saskatoon and Vancouver were the most affected, with six of their key urban areas experiencing a rise in rental rates.

Demand for high-tech properties

Another trend we can currently see in the commercial property market is a shift towards high-tech features, such as property technology, that prioritize environmental sustainability, social responsibility, and cybersecurity. In the realm of office spaces, companies are looking for setups that can cater to remote workers and accommodate desk hoteling.

Staying competitive in this fast-changing landscape requires adapting to evolving market conditions and client needs, but rather than being intimidated by the idea of constant change, you should approach it as an opportunity for growth. In fact, times of uncertainty often provide the best lessons and potential opportunities.

Differences between investors

In the market, we now see a clear divide between those who have ample capital and those who don’t. While some investors are strategically waiting for the right opportunity, others are struggling to move their projects forward due to rising interest rates and tighter borrowing requirements.

However, financial hurdles, such as mounting construction and labour costs, are posing a challenge for all developers. This is something that should be taken into account for the rest of the year.

But don’t let this discourage you. To overcome these obstacles, it’s important to think outside the box and get creative with your financing and project costs. This could mean offering more free rent, providing more tenant inducements, or even lowering rent escalations to entice tenants. In short, those who can adapt and be inventive will be the ones who succeed in the real estate industry, as history has shown.

Although Canada is still facing economic challenges, the retail industry and its members are optimistic as they head into the new year – this is another key finding of the Canada Retail Rent Survey.

2023 – a promising year for the multi-suite residential rental sector

At the beginning of the year, Morguard released its Canadian Economic Outlook and Market Fundamentals report for 2023. According to it, things are looking optimistic for the multi-suite residential rental sector. That doesn’t come as a surprise since the market remained steadfastly confident throughout 2021 and 2022, despite the heightened risks. With many changes in the commercial real estate market, 2023 is bound to be an interesting year. The surprise may come shortly. Will the Bank of Canada raise interest rates in Q2 to slow inflation? Bond prices have seemingly already priced this in. Follow Richard Crenian’s blog to stay updated with all the latest news. 

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News

Why Rent Prices Are Expected To Increase Even More

Due to inflation and other factors, experts predict the already-dramatic rent prices are going to surge even more 

Over the past few months, the Canadian housing market has overgone significant changes. Primarily influenced by the Bank of Canada’s decisions to raise its interest rates, the number of sales as well as home prices have been declining all over the country. While some parts of the market have slowed down, others have heated up! 

Throughout Canada, rent prices have seen quite a large increase, and the trend is unlikely to disappear soon. Here’s why rents are predicted to skyrocket in the upcoming year and how you can make use of this opportunity to your benefit.

Rents have grown in all parts of the country

The sharply rising rental prices can be felt throughout Canada. This shows in reports too. According to data, in the time period between August 2021 and August 2022, rent prices increased by 11%.

When assessing the reasons for these changes, it’s hard to put the finger on just one thing. Rents have grown at such a dramatic rate because of a number of factors. Here are a couple of examples.

Inflation

The biggest influence on the growing rent prices, of course, is inflation. Nearly everything on the market has become more expensive, and rents seem to follow the trend. To better understand how inflation has impacted the state of the market, you must consider the demand and supply. 

In order to combat the inflation, the Bank of Canada had to up its interest rates, which then, consequently, increased mortgage rates. 

When a mortgage is less affordable, it becomes more challenging for people to purchase a property. If fewer people are buying homes, it means more of them are becoming tenants. This, of course, puts added pressure on the rental market. Due to great demand (also increased by a surge in immigration), the prices inevitably grow.

Demand for luxury

Despite the high inflation, the need for luxury doesn’t disappear. People are still willing to pay more to enjoy luxurious apartments and houses. If they need perfection, they’ll find a way to have it. Since single-family homes are still expensive, many individuals opt to rent a property instead, which furthers the strain on the rental market.

Increased Migration

Over the last few years, Canada has experienced a significant surge in immigrants. In efforts to spur financial growth, the government has brought in workers from all across the globe. The only problem is the lack of housing. There are not enough homes to provide them with (or even Canadians). 

When there’s a lack of homes, it only makes sense the rates for available properties rise. Trying to find a solution, we now see efforts to develop homes, but overcoming the shortage will take years.

Not Enough Construction

The market never stops. As we already mentioned, new homes are being built, but that’s not enough to satisfy the growing demand, especially in the country’s urban areas. Statistics show that tenants take up over 4.5 million houses in Canada, and the need for more remains. Even if rent prices go up, the availability rate drops down. This means building new homes is essential.

However, the development industry has experienced its troubles too. Due to the pandemic and shortages in labour, many projects were delayed. Now, the higher construction manufacturing costs make it challenging to fulfil the existing plans.

How To Make The Most Of The Current Situation

While the rising prices can seem scary, they provide an opportunity too. If you have the means, now would be an excellent time to invest in rental properties. According to the Global Property Guide, you can earn a gross rental return of around 3%-5% by renting out a property. 

As we already discussed, the demand is unlikely to reduce. In fact, the need for housing will most likely increase, which means you’re guaranteed to make money from your investment.

However, before deciding, keep in mind owning residential real estate requires effort. It’s an active investment, which means you’ll need to have a hands-on approach. Of course, there is a solution. If you don’t have the time to be an active landlord, you can always use the services of a property manager.

When searching for a rental property, you should look for a place that’s low maintenance and can still be sold for a reasonable price (even in this market).

End notes

The rapid escalation in rents is experienced just about everywhere in Canada. Perhaps the most striking example is Atlantic Canada, which has seen rents rise at the pace of 32.2 per cent. 

Due to a lack of balance in supply and demand, the prices could grow even more. But there’s no good without the bad. If you’ve been waiting on the sidelines to join Canada’s rental market, this is your golden chance! Investing in rental properties will be a smart decision you won’t regret.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

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Media, News

Should I Buy Urban or Suburban Land when I am investing Today?

When it comes to cities like Toronto, is it wise to buy land? It can be a very effective formula if you can buy it with cash flow. Basically, you are using the land to generate sufficient residual income, such as parking, and using that income to offset your mortgage interest and payments.

Make sure there will be local development within 5-10 years, such as high rises, so be patient, think long term, and make sure you can cover your payments with the cash flow from that land. Think long and thing opportunities!

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News

CAPREIT Is Now A Good Time To Invest In Hamilton’s Real Estate?continues To Trim Its Portfolio And Sells Stake In Three Ottawa Apartment Sites

In efforts to spruce up its real estate portfolio, CAPREIT has said farewells to three Ottawa apartment sites in a $136 million deal

Canadian apartment REIT is continuing its efforts to remove aging ‘non-strategic’ assets from its real estate portfolio. Last week, it announced the sale of 50% non-managing interest in three condo properties in Ottawa, which consist of 1,150 units. For the apartments, CAPREIT would receive $136 million. According to the real estate company, the deal was set as the firm is shifting its focus and evaluating its existing portfolio.

Why is CAPREIT Upgrading Its Portfolio?

Curious to learn which sites were involved in the massive deal? According to news reports, the properties sold are the Wellington Towers at 1265 Wellington St, the Riverview Place Apartments at 180 Lees Ave, and the Alta Vista Towers at 1545 Alta Vista Dr. Reportedly, the properties built between 1969 and 1981 were requiring ongoing capital expenditure to improve their growth profiles. That is what prompted the company to sell them.

The company’s CEO, Mark Kenney, explains that the real estate firm is looking to turn its A-class portfolio into an A-plus. As per reports, the cap rate is in the mid-three per cent range. News sites have also noted that CAPREIT transferred $38.7 in existing mortgages to the new owner of the sites. 

Who the buyer is, however, isn’t publicly disclosed. Experts in the industry have revealed that all three properties CAPREIT had shared with Ottawa-based Paramount Properties, which is the responsible property manager.

The recent deal, however, isn’t surprising. CAPREIT has been publicly open about the intention of modernizing and upgrading its portfolio for more than a year. With their new strategy, the company would concentrate its efforts on selling more affordable, value-add properties. 

As the CEO noted, these types of sites usually get higher pricing compared to traditional core assets. In the current situation, the private market is more aggressive. This provides an opportunity for CAPREIT to buy back their shares with an impressive discount, invest in new construction rental, or even pay down debt.

How New-construction Assets Can Be Beneficial

So what does the future hold for CAPREIT? As Kenny notes, we shouldn’t expect their strategy to change any time soon. The company is expected to trim its portfolio even more. In the near future, CAPREIT plans to sell other non-core properties for the same reasons it sold the three Ottawa apartment sites. There are many risks involved with older properties, and, as the CEO explains, there’s also added pressure from government regulation.

Among the biggest current challenges are the rent controls in numerous Canadian provinces. Unfortunately, it makes keeping up with inflationary costs almost impossible. Building revenues aren’t enough to cover the expenses. By selling the more affordable value-add properties, CAPREIT is trying to de-risk the investment.

Of course, selling existing assets and buying back shares will allow CAPREIT to venture into new areas. With this strategy, the trust well can focus on new construction investments. The company’s CEO emphasizes that the new direction would allow CAPREIT to contribute to Canada’s housing crisis. 

New properties are a good thing for owners – they provide an opportunity for them to continue charging market rents. Investing in these kinds of properties means there’s less control to worry about in provinces like Ontario.

CAPREIT’s upcoming plans

When it comes to future plans, CAPREIT’s CEO revealed that the company isn’t planning to concentrate its efforts on developing its own projects. Instead, the firm will be looking into other investment options. Currently, CAPREIT’s main intention is to sell entitled land opportunities, not build on them. The company hopes to provide Canada with new rental accommodations.

About CAPREIT

The reason why CAPREIT’s plans matter is the fact it’s Canada’s largest publicly traded apartment REIT. It is estimated that the company owns around 65 000 residential apartment suites, townhomes and housing communities all around the country. What’s more, the real estate firm also has sites in the Netherlands.

End notes

Capreit’s decision to sell a stake in its three Ottawa apartment sites is one of the most impressive deals we’ve seen recently. This is yet another example that showcases that even though we are in a shifting market, it doesn’t mean all hope should be lost. 

Whenever the market is changing, new opportunities arise – you just have to be open to seeing them. We’re excited to follow CAPREIT’s journey. Hopefully, it will bring more life to the market and provide more rental accommodations, especially because real estate experts predict that multi-family rental properties will remain strong in 2023. 

Although home prices have declined in most areas of the country, rent prices are only expected to grow. The biggest increase will be seen in Vancouver and Toronto – Canada’s most expensive markets.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

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News

Hamilton: The New ‘It’ Place To Invest?

Hamilton is undergoing a long-awaited transformation, which will make Steeltown an alluring alternative to Toronto’s expensive market

The beginning of the year is an excellent time to start planning your investments. If you’re considering joining the real estate market, we’d like to introduce you to Hamilton – currently one of the safest investment opportunities in Canada. 

Offering more availability and affordability, Steeltown is home to numerous biotech, agricultural, financial, and automotive giants and is sure to grow its potential even more in the future. In this article, we’ll take you through Hamilton’s amazing offerings and explain why it’s the perfect place to buy a home or invest in commercial properties.

Convenient Location

Rising interest rates and construction costs have influenced the number of sales throughout Canada. Hamilton is no exception. Still, many experts believe that the city’s market will be better positioned to get through the tough times quicker and less painfully. Steeltown’s excellent location, of course, plays in its favour. 

The city is positioned at the westernmost edge of Lake Ontario, which means its residents are close to nature while still having all the benefits of city life. Since Hamilton is close to the US border, it attracts people doing business in the States.

Impressive development plans

According to the United Nations, Hamilton’s population is estimated to grow by 50 000 in the next five years. Consequently, the demand for housing and commercial real estate will increase too. To accommodate the newcomers, developers will have to offer new housing. Many plans are already in the making.

An impressive example is The Design District – the first of its kind in Hamilton. The new project will be strategically placed in the city’s main transportation hub. The 150 million redevelopment project plans to transform the West Harbour area into a wonderful pedestrian community. Hamilton is growing bigger and better by the day, still, it remains more affordable than Toronto.

Business At Its Heart

Hamilton is a city that’s all about business. Already now, it’s regarded as one of Canada’s most thriving tech hubs. Since it has the fastest growth rate (for mid-sized cities) for start-up companies, Steeltown is certain to gain even more traction in the future. Of course, the fact Hamilton has the highest average wages for tech workers in Canada is impressive too.

Growing Economy

Although Hamilton was long known as a manufacturing city, now it can pride itself on a well-diversified economy in a number of sectors. Entertainment, health care, education, and technology – these are just a few examples. With Hamilton’s fast growth, it’s no wonder its population is expected to increase over the next years.

Reducing Unemployment Rate

Recent reports show that the local economy is moving in a positive direction. Since January 2022, the unemployment rates have fallen. In the current market, the largest shares of job opportunities are provided in sales, business, and finance. Thanks to the lower unemployment rate, Hamilton’s residents should be better prepared for the high inflation.

Nature Enthusiasts’ Paradise

There’s another reason why Hamilton is becoming the ‘it’ place to invest. It is a paradise for nature enthusiasts. The city has more than 120 waterfalls and countless nature trails. In Steeltown, you’ll also find Hamilton Mountain, which is atop the Niagara Escarpment.

Is Now a Good Time to Invest in Hamilton’s Real Estate?

For the last few months, Canadian housing markets have gone through a steep downturn. This has largely been driven by the Bank of Canada’s spikes in interest rates. Some reports (TD Bank) suggest that in 2023 home prices will drop as much as 20-25%. But don’t let the numbers discourage you! 

Buyers who have the means can make use of the current state of the market and buy properties for a lower price. In fact, investing in real estate is a good way to beat inflation and boost your wealth in the long run. Housing is always in demand – regardless of the crisis. 

In 2023, it’s more important than ever to have a proper strategy. Despite the prices going down, they are still high, even for investors, so any decision you make should be well-thought.

End notes

Over the years, Hamilton has grown incredibly and is now considered one of the most alluring alternatives to Toronto. Whether you’re considering investing in commercial or residential real estate properties, it’s a place that’s becoming better by the day. Hamilton really does tick all the boxes for a good investment.

While experts believe the Bank of Canada will likely increase its rates even more, the future is looking bright for commercial property investors. This may not be a year for rolling the dice, but with low-risk strategies, you have nothing to worry about. To stay up to date with all the latest news in Canada’s real estate market, make sure to follow our blog.

Richard Crenian

Founder & President, ReDev Properties

Richard Crenian is the Founder and President of ReDev Properties. Ltd, a private real estate asset management company with its head office in Toronto. ReDev Properties is engaged in the development, acquisition, ownership and management of retail and mixed-use income properties predominantly located in Western Canada and Ontario. To learn more about Richard please visit www.richardcrenian.ca

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Media, News

Smart buildings are changing the way tenants are thinking about moving into condos!

Many global properties have shifted to become fully sustainable as a result of the concept of preserving our Earth’s natural resources, implementing green construction practices, and using advanced technology.

It’s a revolutionary and exciting time for tenants, investors, and property managers as modern technology creates superior commercial and residential buildings! Smart Technology and enhanced connectivity are improving tenant experiences on all fronts thanks to the Internet of Things (IoT). Corporate tenants who are seeking new space, as well as residents looking to live in a building that is forward-thinking in terms of environmental sustainability, will find smart buildings a great option.

Thanks to the Internet of Things, smart buildings can be remotely controlled. High-quality green buildings (more energy-efficient, lower carbon footprint properties) can take the stage in the future thanks to the interconnectivity of the system, especially for tenants seeking sustainable lifestyles. Green buildings have improved our planet in the following ways:

  • Upcycled architecture that reuses resources to build new properties. By reducing waste, preserving natural resources and limiting energy uses, green buildings can be extremely efficient structures that can withstand the test of time.

  • Smart buildings are extremely durable. Going green is just the best way to ensure that your property will need less maintenance and improve air quality in the process.

  • Healthier air. Seriously. Green buildings avoid using building materials that may contain harmful Volatile Organic Compounds (VOCs) or plastic by-products that have been linked to the release of toxic fumes and carcinogens into the atmosphere.

As the global commercial real estate market rapidly shifts to create a culture of innovation and sustainability across a wide range of property types, greener properties are becoming an emerging business strategy. As the need for sustainable apartments is amplified, so does the appeal of moving into environmentally-conscious apartments that have a reduced carbon footprint. Finding a home that has a positive impact on our planet is about more than finding a property with low rent in a great neighborhood.

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News

Suburban Toronto records its first period of positive net absorption since start of pandemic

The suburban construction pipeline continued to be carried forward, currently boasting more than half a million sq. ft. of office space under construction. 

Commercial real estate firm CBRE says for the second quarter in a row, the country’s suburban office vacancy level was lower than the rate seen for downtown regions.

The firm says the national suburban office vacancy rate was 16 per cent in its most recent quarter, while the national downtown office vacancy sat at 16.9 per cent.

During the second quarter, seven out of 10 Canadian markets recorded tightening suburban vacancy, most often in larger magnitudes than were seen downtown.

Positive Shift in Market Does Not Necessarily Mean a Recovery

The suburban GTA office market recorded roughly 457,000 sq. ft. of positive net absorption over the quarter. This marks the first instance since Q1 2020 that net absorption has been overall positive. These encouraging results were primarily driven by the Markham North & Richmond Hill submarket in the East, and the Airport Corporate Center submarket in the West, where 123,000 sq. ft. and 185,000 sq. ft. of positive net absorption were recorded, respectively.

As the flight-to-quality trend seen throughout various markets in previous quarters continues, 60.2% of the overall net absorption in the market was also accounted for by Class A space. While this quarter’s uptick in leasing activity is encouraging and might signal a start of recovery from the effects of the pandemic, current economic uncertainty amidst a looming recession is likely to deter occupiers’ confidence in the market for a little while longer.

 

Suburban Construction Activity

Development in the suburban office market is slowly gaining traction. The total space under construction in the market has more than doubled year-over-year, with 675,000 sq. ft. currently in progress. The East market leads construction activity, with an estimated 473,000 sq. ft. of Class A office space in the pipeline. Metrus, who is currently developing the largest of the four eastern sites, continues construction of The Crosstown Place at 844 Don Mills Road. The 265,000 sq. ft. office tower has approximately 55.0% of the original space still available, as the anchor tenant Celestica, had already pre-leased the top 3 floors. Construction at 60 Mobile Drive continues as well, with 76.0% of the 124,000 sq. ft. redevelopment already pre-leased to it’s anchor tenant OSSTF. 

Veering to the North market, G Group Developments is currently constructing the third largest office project across the suburban market and has already broken ground late last year. The 10-story mixed-use office tower is located at 5250 Yonge Street and is set to add an additional 119,000 sq. ft. of office space to the market, and another 80,000 sq. ft. of retail below. The West market is trailing slightly behind the North and East in terms of the size of projects under construction. However, it is the only suburban market to see new supply this year and is still expected to receive an additional 83,000 sq. ft. of new supply over the next two quarters.

SUMMARY

Despite uncertainty about future office demand — combined with a near-term economic slowdown, rising financing and construction costs, and labour shortages no developments have paused construction and landlords remain committed and optimistic.

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News

REITs Softening in Canada?

A report from CIBC Capital Markets in June 2022 pointed to the fact that REITs seem well-positioned to withstand rising rates well into 2026 for a few reasons, which include the way REITS tend to structure their debt (and being subjected to potentially higher rates each year) and the ongoing return to pre-pandemic operational activity.

Meanwhile, Global real estate services firm Jones Lang LaSalle Inc., in its Q2 real estate outlook, predicted that different segments of the REIT universe would hold up better than others if the economy takes a turn.

“Both industrial and retail are expected to remain resilient to softening economic conditions as the year wears on,” the report said. “Office, however, is expected to experience a delayed recovery from COVID-induced occupancy losses.”

The outlooks came after a generally strong quarter across the board.

On the retail side, as landlords continue to adapt to the realities of post-pandemic life, they are looking for new ways to bring value to their tenants, which include sharing data and offering more diverse experiences.

Companies are seeking to help retailers reconfigure their stores and environments as shopping preferences shift. This includes evolving retail spaces, drive aisles in parking lots, signage and even loading flows. With these tactics, commercial real estate companies are confident it can withstand any turbulence inflation might inflict on the retail sector.

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Media, News

The Metaverse and CRE: The money-making future

The Commercial Real Estate (CRE) market has adapted to thousands of changes over the last decade, and it has prevailed. So what’s next on the horizon? The Metaverse that allows simulated plots of land to be purchased as a way to entice potential investors!

The Metaverse is a network of 3D virtual worlds focused on social connection – it’s the Internet as a single, universal virtual world that is facilitated by the use of virtual and augmented reality devices. The metaverse is how individuals will experience the next generation of the Internet, so it’s a wise decision to continue to expand further into the CRE mainstream. It’s all about creating a digital-first experience for all users, and HSBC is doing the right thing by dipping into the virtual property market earlier than later.

With a large portion of the world dipping into the Metaverse pool, also formerly known as Facebook, it’s safe to say that the platform will quickly become prevalent in numerous CRE closing deals. Leading the charge is the banking giant HSBC – Hong-Kong based bank HSBC has announced that it would join the metaverse through the Sandbox platform. The bank will be an innovator in the field of purchasing a plot of land in the digital universe, with the main focus being on sports, e-sports and gaming.

After HSBC announced it would be joining the Sandbox, the platform’s native cryptocurrency, SAND, jumped more than 11% on Wednesday to $3.01. The token was priced at about $2.96 as of Wednesday afternoon, still up 9%.

HSBC is following in the footsteps of JP Morgan who has set up a large virtual presence in the Metaverse with a blockchain-based Decentraland. The American bank giant has already opened a lounge space in a virtual mall, hoping to increase their profits through attracting a newer audience.

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