Though the residential real estate market gets more fanfare, commercial units in Canada were in high demand in 2013, according to RE/MAX’s new report. Space was scarce in the first half of 2013, especially for multi-unit residential, industrial and retail sectors. That lack of supply led to softening sales in 73 per cent of the big city markets studied between January and June.
The cities that reported a surge in commercial units sold? Hamilton-Burlington, St. John’s and Calgary saw 15 per cent, 10 per cent and eight per cent increases respectively.
Dollar volumes have also declined alongside dwindling sales. However, RealNet reported that GTA volume is up almost 28 per cent over last year’s levels to $7.7 billion and Hamilton-Burlington and Winnipeg also saw increases.
The biggest movers and shakers in the market don’t appear to be larger institutional investors (REITS and pension funds), but smaller investors and end users. They’ve spurred demand for industrial product, multi-unit residential product and retail storefront.
“For love or for money, owners are holding firm and it’s creating a real challenge in the marketplace. A serious portion of commercial sales are exclusive—that’s been the case for years—but as demand has risen, it’s made navigating the market increasingly difficult, especially for those with a lighter portfolio. Yet, buyers remain undaunted,” said Gurinder Sandhu, Executive Vice President, Regional Director, RE/MAX Ontario-Atlantic Canada, in the news release.
“In what many have traditionally considered a ‘big fish’ game, more and more individuals are making the foray into the market—a reflection of confidence, climate and a new investor mindset.”
Industrial space was tight in 10 out of the 11 markets. Strong demand fueled price increases with Regina seeing the price per acre of industrial land nearly doubling between 2008 and 2013.
Supply was a big issue in the city centres as retail expansion was felt in each corner of the country. As retailers dealt with more American and international brands moving into the country, the increased competition brought on a push for more visibility. The residential construction boom also led to the a growing number of stores, power centres, outlets and strip plazas in newer communities.
However, inventory has been building in the office sector resulting in rising vacancy rates, a trend we picked up on earlier this month in Toronto.