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As an unforgettable 2020 draws to a close, most of us will be happy to move forward to better days. With that in mind, we’re speaking with CBRE’s market leaders to find out what commercial real estate trends they’ll be watching for in their cities in 2021.
Jason Kiselbach, CBRE Vancouver Managing Director, sees even brighter skies ahead for industrial, evolution in the retail sector and investment deals looming for significant multifamily assets.
One thing we’ll be watching for in the industrial sector is rental rate growth. The question is, can it continue at the pace it’s been going? The demand is obviously there; large third-party logistics providers who deliver for retailers and the retailers themselves will continue to need large-format distribution space. There are also going to be changes with how the larger occupiers use space. We’ve been seeing examples of new technologies and automation to increase efficiency in the use of industrial space.
Oxford has started construction on their multi-storey distribution centre in South Burnaby. Everybody’s interested to see the activity on that and which types of tenants it lands. Also, the film business has picked up slack from a lot of other industries that have struggled this year. So I’ll be watching for the demand there and what impact that will have on the industrial market long-term. We've seen some industrial sites sold for development of purpose-built studios for the first time in many years.
The big question heading into 2021 is, will see pent-up demand due to delayed decision making translate into tenants coming back to the market—whether that’s through new deals or negotiating on lease expiries—and will that lead to a really busy market in the second quarter or the back half of the year. There is still uncertainty about when the large-scale return to the workplace will happen, and how people will adjust to using their space long-term, whether it’s spreading people out a bit more or just more health and safety protocols. However, we are seeing more optimism and tenants wanting to discuss their return to work plans leading into 2021.
We’re starting to see new formats coming out: boutique fitness, and restaurants utilizing a larger portion of their space as kitchens for takeout and delivery. Will that be a long-term trend or a short-lived? Then what happens on some of the corridor streets where we’ve seen vacancy. What will the new concepts be that take those spaces over? One thing we didn’t expect in 2020 was the growth in the suburban retail market as everyone worked from home. Again, will that be long-lived and do we see more positive fundamentals for those suburban or secondary retail assets?
We have some significant multifamily assets in the market. So next year we’ll be watching for what the demand ends up being for those multifamily investment deals currently in the market and whether they set new benchmark fundamentals. Then there’s the purpose-built rental spaces, which are more expensive and higher end than your traditional rental stock. It will be interesting to see whether continued growth in tech employment lead to more demand for these luxury rental spaces.
There has been growing interest in alternative assets, such as self storage and data centres. We’ve had a few tenants show up looking for that type of space, but more from investors who want to purchase data centres because they see a long-term trend forming as we see more emphasis placed on data, ecommerce and video streaming and there’s a need for back of house data hosting. Also, I expect to see a continued push for some of the real estate opportunities in the suburban markets like Surrey, Langley and Abbotsford. And future transit hubs, along Broadway or in the suburbs where there are new SkyTrain routes planned.