Recently PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI) completed and published their annual report on the trends affecting the US and Canadian commercial real estate markets.
What are the main trends in the commercial real estate market in Canada? Here are the top 5 commercial trends that were highlighted.
1. A shortage of “top-tier” properties
Because of the dominance of larger investment trusts, it is becoming more and more difficult for smaller investors to buy top-tier properties. This means that smaller investors are forced to buy up older properties which need more renovations to see a return on investment.
2. Currency Markets
With the weaker Canadian dollar and the stronger US dollar, more investment is expected in real estate from the US. This can help boost investment in the local market with more Canadians looking to invest at home.
This is also making investment in Canada’s commercial real estate market more appealing to overseas investors.
3. Office Leasing is Changing
It is becoming more and more difficult to purchase office space for leasing. This has led investors to change how they rent out commercial space. We are seeing office space being split up and leases become longer. Tenants are also trying to squeeze more use out of the space they already rent.
4. Lower Oil Prices
Although lower oil prices are having an impact on the economy in certain places, like Alberta, it could help to boost investment elsewhere in the country. The drop in oil and gas prices means that businesses are saving money on fuel and they are more willing to invest those savings into real estate. This could strengthen the commercial real estate market across the country.
5. Increased Use of Technology
The increased use of technology is having a positive impact in Canada’s commercial real estate market. For example, investors are no longer travelling to various areas to check out the real estate but are using Google Map’s Streetview. Also, E-commerce continues to grow and these start-ups need to find office space. Because of the nature of E-commerce, there is also a greater need for warehouse property rather than shop properties.
