Real estate investors are drawing back from Canada’s biggest city as high interest rates, construction costs and remote work take a deeper toll.
Commercial real estate investment in the Greater Toronto Area dropped 27 per cent in the second quarter of this year, down more than $2.5 billion from the year before, according to the latest report from CRE intelligence firm Altus Group.
The plight of office real estate since the pandemic is well known. In a recent report McKinsey Global Institute predicted that remote work could wipe US$800 billion from the value of office buildings in the world’s major cities.
Globally office attendance still is 30 per cent lower than what it was before the pandemic and McKinsey expects demand for office space to sink 13 per cent by the end of the decade.
The return-to-office has also stalled in Canada, said Altus.
The national office availability rate climbed to 18 per cent in the second quarter and hit 18.5 per cent in the GTA, the third highest in Canada after Calgary and Edmonton.
Sublet space rose to almost 25 per cent of the total available office space, up four per cent from the year before.
But interest rate hikes by the Bank of Canada, a shortage of skilled labour and rising construction costs are also taking a toll on residential investment, which fell 44 per cent from the year before.
“However, investors are optimistic as the constrained supply of rental housing and the high cost of housing in the market supports asset fundamentals,” Altus said.
The only sector that’s growing is industrial, where investment rose 36 per cent from last year to $3.39 billion.
“Rising interest rates and construction costs have not deterred investment and new supply as the GTA remains undersupplied relative to the demand,” said Altus.
But even this star is showing signs of strain.
Altus said investors are turning to the lower risks and stable returns of industrial real estate, but remain cautious as the availability rate rose to 2.3 per cent from 1.3 per cent the year before.
About three million square feet of new supply entered the GTA market in the second quarter of 2023, but unlike previous quarters a “significant portion” of it was not pre-leased, says the report.
Nor does Altus see a quick end to Toronto’s decline in real estate investment. The slowdown in the first half of 2023 is likely to continue for the rest of the year because of high interest rates and a growing gap between what sellers are asking and what buyers want to pay.
“Given the current difficulties in the office and some parts of the retail market, industrial and residential real estate will continue to be favoured asset classes in the GTA market.”
Those in political power along with equity market participants seem to think the war on inflation has already been won, but investing pro Martin Pelletier says it may be too soon to declare victory.
Betting one’s portfolio on an outright win over rising prices in the near term could be a dangerous proposition, so Pelletier offers ways to take out a bit of insurance in the event that the war on inflation drags on longer than many expect.
Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com, or hit reply to send us a note.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
Dolphins will bring in another quarterback, while Tagovailoa deals with concussion
David Beckham among soccer dignitaries attending ex-England coach Sven-Goran Eriksson’s funeral
Vancouver Whitecaps cautious of lowly San Jose Earthquakes
Edmonton Oilers sign defenceman Travis Dermott to professional tryout
Alberta town adopts new resident code of conduct to address staff safety
United Airlines will offer free internet on flights using service from Elon Musk’s SpaceX
Kirk’s walk-off single in 11th inning lifts Blue Jays past Cardinals 4-3
Unifor says workers at Walmart warehouse in Mississauga, Ont., vote to join union
