Ottawa’s commercial real estate sector is “gaining momentum” thanks to a booming industrial market and a retail industry that’s roared back to life in recent months as pandemic-related restrictions have lifted, according to a new report.
After topping $3.8 billion in a record-setting 2021, commercial investment activity in the National Capital Region is on pace to exceed that amount this year, Re/Max says in its 2022 Commercial Real Estate Report released on Thursday.
Citing the Conference Board of Canada’s projection that Ottawa-Gatineau’s GDP will grow by 3.4 per cent in 2002 as the tech and construction sectors heat up, the firm said that sunny forecast should bode well for real estate investors.
“Against this backdrop, the city’s commercial market should remain vibrant, with improvements projected in the office sector as the pandemic recedes from the forefront,” the report said.
Re/Max singled out the red-hot industrial sector as the star performer in Ottawa’s commercial real estate scene.
1.7% availability rate
The report cited the city’s close proximity to 400-series highways and the U.S. border as prime reasons for the ongoing surge in industrial activity, adding the limited stock of available properties is “presenting serious challenges” for investors seeking to capitalize on the sector’s growth.
According to the Altus Group, Ottawa’s industrial availability rate sat at 1.7 per cent in the first quarter of 2022, down from 3.1 per cent during the same period a year earlier.
“While intent (to invest) exists, a shortage of available inventory for both lease and sale has fallen short of demand, especially in the popular west end,” Re/Max said.
The company said the space crunch has pushed industrial lease rates to a new record average high of a net $15.50 per square foot – a 30 per cent increase over the average of $12 per square foot just two years ago.
“In the city’s east end, smaller space is almost impossible to find, with listings that do come on stream snapped up quickly, often at a premium,” the report said.
Meanwhile, Re/Max said Ottawa’s retail real estate sector has “rebounded with a vengeance” after a difficult two-year stretch in which COVID-19 wreaked havoc with brick-and-mortar stores, restaurants and other mainstreet businesses.
Smaller spaces have been almost completely snapped up in major malls such as the Rideau Centre, Bayshore Shopping Centre and St. Laurent Shopping Centre, the report says, adding that vacant storefront properties in areas like the ByWard Market, Glebe and Westboro are also being occupied at a brisk pace.
“Negotiations with landlords are more complicated than in years past, with many wanting guarantees in the form of personal covenants,” Re/Max said. “The glut of space available last year has been absorbed, albeit at a slightly lower lease range.”
Suburban mall revival
The report said suburban retail complexes are also undergoing a renaissance, with fitness facilities, restaurants and fast-food outlets among the major tenants taking over space in big-box malls.
The company isn’t as bullish on the office sector, which still has an overall vacancy rate above 10 per cent. With many civil servants still working from home, Re/Max said it could be a while before Ottawa’s office towers are teeming with tenants again.
As a result, the company said, landlords have started offering incentives such as free rent for a year and various leasehold improvements in a bid to fill vacant properties.
“At the same time, the relatively low interest rate environment has generated an upswing in demand for office buildings in suburban areas like Kanata,” Re/Max added. “Most are smaller, commercial buildings ideal for professional offices, generally sought-after by end users.”
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.
