Demand for commercial real estate continues to outpace available supply in western Canada and the Greater Toronto Area, making for a competitive environment, says Re/Max.
The realtor’s commercial investor report — which highlights market trends in seven key regions across Canada including Greater Vancouver, Alberta and the GTA — says that much needed supply paired with low vacancy rates is limiting sales activity compared to the previous year in most major centres.
But Re/Max’s regional executive vice president, Elton Ash, said despite supply challenges, the market in western Canada “continues to hold steady across all products in the commercial sector.” This is supported by foreign investment interest, employment-driven economic growth, low interest rates and a strong desire to increase downtown core density, added Ash.
The report also points out that new property coming online, as well as baby boomers’ decisions to sell their properties and businesses as they retire, will increase vacancy rates in the coming years.
Here are a few highlights from Re/Max’s regional breakdown of Canada’s commercial real estate market:
- Momentum has remained in an upswing across Greater Vancouver, countered by a low inventory; foreign investment, specifically, continues to be a key driver of growth.
- Unlike most other markets, where retail storefront demand is on the rise, in Greater Vancouver small businesses are choosing to anchor to shopping centres to generate traffic.
- A economic growth rate is driving commercial market growth across Alberta
- However, the recent drop in oil prices may influence the market in months to come.
- Calgary’s current lack of inventory can be attributed to rising values, thereby increasing the demand for commercial real estate, specifically in retail and warehouse space for e-commerce and retail.
- The Edmonton market has seen a sustained period of exceptionally low vacancy rates, creating a hospitable environment for real estate investment.
Greater Toronto Area:
- Higher commercial lease and sale prices across the GTA are a result of attractive interest rates.
- Demand for retail storefront remains high in central Toronto, where densification and the influx of young people are generating demand for small storefront space. (Read our story on the Urban Land Institute and PwC’s annual report for more on the trend of densification and the influx of young people in Canada.)
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