A new real estate report published by PricewaterhouseCoopers (PwC) and the Urban Land Institute revealed that Canadians’ growing desire to live, work and play in the city is dominating future trends (Tweet this).
And that means more mixed-use space could be coming to a downtown core near you.
“With challenging infrastructure in all major Canadian centres coupled with the urbanization trend, there will be a continued demand for retail, office and residential space in our urban centres where there is easy access to mass transit,” said Lori-Ann Beausoleil, Partner and National Real Estate Leader at PwC in the news release.
“Competition for these sites and uses will continue to place pressure on developers to reformat their product offerings to optimize space as these locations become scarce.”
In other words, Canadians tired of wasting time in traffic due to “challenging infrastructure” are turning to city life, a trend that’s boosting demand for urban real estate in all forms.
The report pointed out how, in light of Ontario’s greenbelt plan to help curb sprawl, Toronto in particular is seeing increased intensification and higher density. Treading territory we’ve mapped out in the past, they note that, in line with the increasing preference among Torontonians to live close to their place of work, there’s been an rise in new multi-use spaces that combine condos with office and retail space, or even condo, hotel and commercial space.
Across the country, intensification and reverse migration from the suburbs to the city was named as one of the most “forceful and rapidly emerging secular trends in both corporate office and residential real estate.”
It’s led to a boom in office space building in the country, and has reshaped how these spaces are being built. There’s a larger emphasis on more workers using less space, collaborative work environments and the creation of part-time work space as working from home becomes an option for more people.
But as more people flock to urban cores, the suburban office market is feeling the pain of reverse migration, especially spaces that are not easily accessible by mass transit. However, that portion of the market could be buoyed by an improving US economy.
To keep up with infill developments going up in city cores, the report suggests suburban development will require more investment in infrastructure to move workers efficiently into major employment centres in downtowns.
In fact, infrastructure is such a big issue in the GTA, Calgary and Edmonton that in the future, developers may be required to finance infrastructure upfront in order to move people easily from their new projects.
As cities see greater intensification, overbuilding remains a concern in centres such as Calgary and Toronto. For Calgary, there were concerns that excess condos could flood the market. However, respondents to the survey that acts as the basis of the report, suggested that the Toronto condo market would stay afloat given the already tight rental conditions in the city. Other market worries? The rising cost of owning a home in the country outmatching income growth.
The report also laid out the “best bets” for real estate investment going into 2014. Urban and infill retail development was marked as a promising trend since retailers go where the customers go, and increasingly, the customers are moving downtown.
Mixed-use projects in downtown areas were also singled out since they appeal to Generation Y, which is spurring the move to city cores alongside other reverse migrants.
The report also laid the case for investing in combined commercial/multi-family developers, which should have “slightly better prospects” for homebuilders. It recommended builders consider neighbourhoods that were looking to increase density within the urban core.
For more details check out the table below…