Morguard recently reported that the Canadian commercial real estate market is expected to stay strong in 2020, following its 2019 growth.
Morguard is a Canadian real estate company based in Mississauga, Ontario. They published their predictions in the annual economic outlook, the 2020 Canada Economic Outlook and Market Fundamentals Report. Here is the most important forecast data from the Morguard report.
Canada’s Retail Commercial Real Estate Market Continues to Evolve
The retail segment of the commercial real estate market in Canada showed incredible growth last year and will continue evolving throughout 2020 as well.
In mid-2019, the national retail vacancy dropped by 100 basis points and reached 5.8%.
In the meantime, plenty of investors saw huge potential in numerous Canadian retail CRE assets. The country ushered in a whopping $3.1 billion in retail investment properties.
The figure seems promising, as it’s well above the long-term average and commercial retail assets in the country are expected to continue to be a strong investment.
Non-Retail Commercial Real Estate Sectors in Canada Also See Steady Growth
Morguard reports several more CRE segments in Canada are to keep performing very well in 2020.
The Housing Market
After the housing market in Canada went through a slow year, it is now finally stable.
The prices and home sales have been growing steadily for seven months in a row, even in Vancouver. Over the next 1-2 years, the national housing market is expected to push the real estate market’s performance.
The rental apartment sector shows the biggest ongoing growth that will continue throughout 2020.
In 2018, this sector totaled a staggering $8.3 billion in multifamily investments. In 2019, the figure was $4 billion for the first six months alone.
More and more Canadians are downsizing and renting their apartments, so Morguard expects the rental rates to keep increasing together with the growing market demand.
The Office Sector
The Canadian office sector is also seeing a strong performance, mainly thanks to the country’s growing tech industry.
Up until mid-2019, Canada totaled $5.5 billion in office sector investments. By that time, there was an 11.3% national vacancy rate. Today, Toronto and Vancouver have the lowest vacancy rates on the continent regarding downtown offices.
Alberta’s cities, particularly Calgary has been struggling with low energy prices and high office vacancy rates, which remain over 20%.
The Industrial Sector
The Canadian industrial sector totaled a record of $12.7 billion in 2018 investments and continued performing well in 2019.
It’s expected to follow suit in 2020, although the country needs more industrial space to meet the high demand. During the first six months of 2019, the national availability rate was only 3.1%, the lowest in the past 20 years.
Summary
The commercial real estate market in Canada showed excellent performance in 2019 despite the global economy dispute and moderate GDP growth of 1.5%. The ongoing population growth in the country is also one of the key factors helping the CRE market grow steadily.
With the rental market conditions holding their own, Canada will see even more investors in 2020, placing their capital into its various commercial real estate assets. The country’s CRE market is expected to stay hot in 2020, so contact REDEV today to see the investment opportunities we have available.