These factors have the potential to impact Canada’s commercial properties…
Retail and mixed use property investors in particular should be alert to these trends. As well as individual investors, funds and family offices looking to exit the sliding stock market and who are evaluating new investment opportunities in real estate.
New Online Sales Taxes in the US
In June 2018, a new high court ruling empowered American states to begin levying online sales taxes. That means millions of businesses big and small who are likely to be hit with this new tax burden. If they don’t eat the losses themselves they will have to pass them on to consumers, deal with collecting and filing the taxes. That is more of a financial burden on virtual businesses and especially on startups and entrepreneurs trying to make the numbers work against Amazon’s massive marketplace and offshore merchants selling online. Implementation of these new tax laws may vary and may be complicated. What can be expected and what big brick and mortar corporations have been fighting for this for is to level the playing field and make physical retail stores more competitive again. That could be great for Canadian retailers.
Flexible Mixed Use Property Development
Robert De Niro’s Nobu brand has announced it plans to achieve $1B in sales by adding hotels and condos above it’s retail spaces and restaurants. Whether De Niro pulls this off or not, the point is that more are seeing the benefit of building and redeveloping mixed use properties.
The key to this is flexible building and structure. Rather than there being one right answer, success is built on the agility to deliver great returns in any phase of the market. This can mean income from leases during certain phases, and even selling off individual office or residential condos at market peaks.
Shareholders & Investors are Demanding More
HBC is currently facing backlash from its shareholders due to not taking full advantage of the real estate it owns. In particular, they are frustrated that the company isn’t making full use of the space to add mixed use tenants and maximize income. Investors have grown smarter and see that many Canadian commercial properties and big funds just aren’t delivering the maximum.
Between Canadian brick and mortar retailers gaining a more competitive edge against online US companies and a landscape right for redevelopment there are great opportunities for investing in commercial properties in Canada. However, there is a big difference between asset managers and opportunities, which are fully maximizing value and income potential for investors and who have the knowledge and skill to position their assets to outperform in all the market turns coming up. Choose your team and investments with this in mind.