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Commercial real estate: Trends to watch in 2021 – The Globe and Mail

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Downtown Calgary skyline. The office vacancy rate in downtown Calgary in third-quarter 2020 was 28.7 per cent, according to CBRE statistics.

Illustration/iStockPhoto / Getty Images

The story of Canada’s commercial real estate in 2021 will depend on how many COVID-19 plot twists have caused permanent changes in leasing and transaction patterns.

Industrial and retail real estate trends that had already emerged in 2019 were greatly accelerated by the pandemic, say industry professionals. Warehousing and distribution centre construction and lease rates, already on the upswing, took off as e-commerce increased. Bricks-and-mortar retail has been hit harder as some retail chains founder and mall tenants struggle to make their rents during lockdowns.

The office sector has been thrown into disarray and forecasts are divided on where office vacancies and trends are heading.

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“One camp is predicting work-from-home could become the new norm and the other is saying we will return to how things were previously,” says Matt Picken, Jones Lang LaSalle Inc.’s (JLL) national lead of capital markets.

“I think there will be a compromise. Clearly there’s some cost saving involved in work-from-home but to the detriment of collaboration and office culture.”

JLL’s third-quarter 2020 office report showed a total office vacancy rate in Canada of 10.8 per cent and the “largest negative quarterly net absorption in over a decade, totaling nearly 2.7 million square feet of occupancy losses.”

But Mr. Picken remains confident in an office rebound once a vaccine is in place. “It’s too early to write off the office market. Our vacancies were so low for such a long time, this is not necessarily such a bad thing.”

Scott Addison, president of brokerage services Canada for Colliers, says available space, including lease and sublease vacancies, in major downtown markets could increase to more than 10 per cent in the next 18 months.

“The amount of sublease space coming to market is dramatic – 350 per cent more sublease space came to market in the last quarter than last year at this time.”

Mr. Addison says companies may have taken more space than they needed, based on big growth projections, and firms with multiple locations may be consolidating as leases come up.

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According to Ray Wong, vice-president of data operations at Data Solutions for Altus Group, there are discussions between office landlords and tenants about downsizing, renegotiating rents and even increasing space requirements to accommodate physical distancing.

“On top of that, we’re seeing increased inquiries into the suburban markets, closer to where people live.”

Mr. Wong adds that some companies are looking into relocating further out of the big cities to markets such as Kelowna, B.C., Kitchener-Waterloo, Ont., and Halifax to get more bang from the buck.

That drive to lower density locations might help Calgary, says Greg Kwong, regional managing director in Calgary for CBRE.

The office vacancy rate in downtown Calgary in third-quarter 2020 was 28.7 per cent, according to CBRE statistics. Mr. Kwong says the continuing crisis in the energy sector plays as big a role in Alberta as does COVID-19.

Vancouver is not experiencing the office vacancy woes felt elsewhere to the same extent, according to CBRE’s Vancouver managing director Jason Kiselbach.

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“We entered 2020 with one of the lowest vacancies and we still have that,” he said, adding that a diversity of business, including film production and health sciences, as well as constrained office supply has contributed to a favourable climate.

Industrial properties, particularly warehouse and distribution, are bright spots for all markets in Canada. A trend to low vacancies and increasing lease rates was boosted significantly in 2020 by COVID-19′s influence on the rise of online shopping. Experts say the trend will continue through 2021 with still more construction and higher rates.

Mr. Wong says he would tell investors that their most promising bet for 2021 would be industrial land with room for possible expansion on a major arterial road. There is little available space in the market, he says. Third-quarter 2020 figures show national availability at 3.1 per cent, with Toronto figures at 1.9 per cent and Vancouver at 2.3.

In Vancouver, where available land is at a premium, industrial is beginning to go multistorey. Oxford Properties Group’s Riverbend Business Park is the first multistorey facility of its type in the Vancouver area.

Frank Magliocco, real estate leader with PwC Canada, says there is also a trend to some “reshoring” of manufacture because COVID-19 revealed the disruptions that can happen to global supply chains because of a pandemic.

“That’s also driving wind under the sales of industrial.”

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Malls and power centres are another uncertain sector of industry. Some observers are seeing excess retail land being converted to residential and industrial uses.

There has been some increase in vacancy in downtown Toronto in multiresidential.

The Associated Press

“There is potential to convert some non-performing shopping centres to last-mile fulfillment centres,” JLL’s Mr. Picken says. “The numbers are going to start to break in favour of this type of development because there’s such a shortage of warehouse space in key urban areas.”

Mr. Addison predicts that big regional malls and local corner stores will return post-COVID-19, but consumers may still choose e-commerce over a trip to a power centre.

“Because of the pandemic, those who weren’t using e-commerce are finding ‘this is easy, it’s pretty good.’” Mr. Addison says. “In February, it’s snowing, you’re in Calgary. Are you going to drive out to a power centre or are you just going to order it off Amazon and have it delivered that afternoon?”

Investors show increasing interest in multifamily residential

Emerging Trends in Real Estate 2021, an annual survey of real estate professionals conducted by PwC and the Urban Land Institute, showed 61.4 per cent of survey respondents favoured buying moderate income apartments; 48 per cent rated single family rentals as a buy and 42 per cent recommended lower income rentals, the top three commercial real estate categories in the survey.

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According to Ray Wong, vice-president of data operations at Data Solutions for Altus Group, there has been some increase in vacancy in downtown Toronto in multiresidential, but that is because of a conversion of Airbnb units to longer-term rentals.

Canada has also missed a cycle of immigration because of COVID-19, he adds.

“Hopefully, immigration will start to come back, and I think a lot of those vacancies will start to dry up again,” Mr. Wong says.

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Home sales hit record in 2020 despite pandemic – CP24 Toronto's Breaking News

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OTTAWA — The Canadian Real Estate Association says home sales in December hit an all-time record for the month to end what was also a record year.

It says December sales were up 47.2 per cent compared with December 2019, the largest year-over-year gain in monthly sales in 11 years.

Sales for the month were also up 7.2 per cent compared with November.

For 2020 as a whole, CREA says some 551,392 homes were sold, up 12.6 per cent from 2019, and a new annual record.

The actual national average home price was a record $607,280 in December, up 17.1 per cent from the final month of 2019.

CREA says excluding Greater Vancouver and the Greater Toronto Area, two of the most active and expensive markets, lowers the national average price by almost $130,000.

This report by The Canadian Press was first published Jan. 15, 2021.

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Who knew a health crisis would spur on a Vancouver real estate boom? – News 1130

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VANCOUVER (NEWS 1130) – Prices are up, and buyers are bidding. As the option of remote work continues, the demand for property is also continuing to rise.

One of the country’s leading brokerages says there is a real estate boom in Vancouver, and while low interest rates and pent-up demand are factors, the pandemic has helped fuel it.

Royal LePage CEO Phil Soper says the aggregate price of a Greater Vancouver home last quarter rose more than seven per cent to a little over $1.1 million.

RELATED ARTICLE: Vancouver office vacancy rates spike amid COVID-19, but well below national average

New data from Royal LePage finds more than half of Canada’s largest real estate markets have seen double-digit price growth over the last few months.

The brokerage says multiple offers have again become common and almost every detached home is attracting competitive bids.

Soper says 2020 was the strangest year of his career and that the term “recovery” is an understatement. He adds that, looking at fourth quarter results, he can state without hyperbole that the health crisis has triggered a real estate boom.

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Top Real Estate News of the Week: January 11 to 15 – Toronto Storeys

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Another week in Toronto has come to a close and, from January 11 to 13, real estate stories continued to take our desktops by storm. In fact, you may have struggled to keep up with it all!


And, let’s be real: everything — *gestures vaguely* — is a lot right now, so there’s a fair chance you don’t want to spend your weekend doom-scrolling, trying to catch up on all the latest news about what’s up, what’s down, and what’s not budging. In fact, we wouldn’t recommend it. (Who thought the change of the calendar year meant anything at all, really?)

To make your day a little easier, we’ve gathered up this week’s top articles and assembled them below. Consider this place your Toronto real estate news digest, where you can get the picture before you go outside to get some (socially distanced) fresh air.

With that, we’ll get right to it. Here are your top “storeys” for the week:

1. What Ford’s New COVID Measures Mean for the Ontario Construction Industry

As Ontario grapples with surging daily COVID-19 case numbers that are now threatening to swamp hospitals, Premier Ford announced new public-health measures aimed at slowing the spread of COVID-19, which includes new restrictions to the construction industry. The measures include a stay-at-home order, in connection with a province-wide state of emergency declaration.

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2. Ford Government Approves Temporary Ban of Residential Evictions

With stay-at-home orders in place, the Ontario government has approved an emergency order that temporarily pauses the enforcement of residential evictions. This marks the second time in less than a year that the province has paused residential evictions. The government made the announcement Thursday morning, two days after Premier Ford declared the province was entering its second state of emergency as Ontario grapples with surging daily case numbers that are now threatening to swamp hospitals.

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3. Canadians Believe More in the Housing Market Than the Overall Economy

Is this optimism? Despite the negative implications COVID-19 has had on nearly every business sector, it appears the pandemic hasn’t had an (lasting) effect on the the real estate industry. According to RBC’s latest edition of its Home Buying Sentiment Poll, Canadians still believe in the strength of the housing market — despite growing concerns of the overall economy.

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4. Average Rent Prices in Downtown Toronto Are Now Less Than the GTA Average

“Never thought I would see this,” Realosophy Realty President John Pasalis wrote on Twitter. His words are paired with a visual, which shows that right now, downtown rents are priced lower than those across the city at large, as well as across the GTA. The core’s average rent price is $2,132, under Toronto as a whole at $2,152, and the GTA’s current $2,227 average.

But there’s more to rent prices than their at-a-glance averages.

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5. Average 1-Bedroom Rent in Toronto Has Dropped Over 20% Year-Over-Year

In a similar vein to the above article, this week, Padmapper released its January national rent report, analyzing hundreds of thousands of listings last month to examine median rent prices across the 24 largest cities in the country. And where the country’s largest city is concerned? One-bedroom rents fell nearly 4% month-over-month, while rents are down over 20% year-over-year.

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6. Who Gets the House? ‘Divorce Month’ Prompts Real Estate Questions

In news that’s both a bummer and important to know, the first month of the year is often known as ‘Divorce Month’ — pandemic or not. And COVID, along with all the increased time it’s forced people to remain together under one roof, has likely only added to the number of people now seeking separation from their partners. And while the initial decision to part ways is the first of a long list of decisions that must be made, what to do with a shared property is most often also hanging out at the top of that list.

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7. Canadian Housing Market Already On Pace to Have Record Year in 2021: RBC

On Wednesday, RBC Senior Economist Robert Hogue released a new report looking at the current state of the country’s housing market, which Hogue believes is on pace to set more records amid the current unprecedented public health and economic challenges. The report begins with this sentiment: “in the end, the rollercoaster that was 2020 left Canada’s housing market more or less where it started the year: full of bidding wars, escalating prices and exasperated buyers unable to find a home they can afford.”

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8. A Sprawling Winter Light Exhibit is Coming to Toronto’s Waterfront

Need some fresh air? We feel you. Starting this Friday, two new outdoor light exhibits will open to the public as part of Harbourfront Centre and The Waterfront BIA’s outdoor winter celebration of arts & culture: Site Alive | Winter Editionwhich will transform the 10-acre waterfront campus into a unique, immersive world of sensory experience.

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