Analysts at two of Canada’s largest commercial real estate firms are split on how COVID-19 will affect the industrial real estate sector.
Marcus & Millichap, in its report Coronavirus outbreak: implications for real estate, noted that history has shown that pandemics, while very scary, are fairly brief.
“Pandemic outbreaks such as SARS, the H1N1 “swine flu,” and the “avian flu” or “bird flu” short-term market instability that moved toward stabilization over the following three to six months,” the report stated.
It continued: “While the flow of goods from China may taper over the short term due to the shutdown of several Chinese factories, this poses little risk to industrial space demand. Western Canada port markets’ industrial vacancy rates remain exceptionally low and face modest development risk. Some companies may postpone commitments for large space blocks at major warehouse facilities as they cautiously monitor the economic outlook and await additional information on the supply chain outlook.”
However, Colliers International, in its recent COVID-19: Implications for Canadian real estate, warned that Canada’s industrial sector is expected to be heavily impacted by disruption in international supply chains.
“With China being the largest global manufacturer of components, the ripple effect of plant closures in the automotive, electronic and pharmaceutical industries has caused a severe disruption,” the report stated.
The situation has resulted in Port of Vancouver reporting an 85 per cent decline in volume of Chinese container shipments with 50 per cent fewer sailings. Logistic companies in Toronto have reported 60 per cent fewer inbound containers, Colliers noted.
Colliers advised industrial occupiers to assess their risk tolerance to determine inventory levels required to handle a potentially huge increase in shipments once the virus threat ends.
Occupiers may be required to restructure financials to allow for more liquidity and seek larger spaces to accommodate the extra inventory, Colliers noted.
Doing so could be challenging, given the historically low industrial vacancy rates in Canada’s major markets, with 0.4 per cent vacancy in the Greater Toronto Area and 1.2 per cent in Metro Vancouver.
“As supply returns to the market, industrial occupiers should capitalize on the demand opportunities to regain their lost capital,” Colliers recommended.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
