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We’re not out of the woods but our 2021 Market Outlook report anticipates a pop in the Canadian economy later this year as we emerge from the pandemic.
Here are highlights and opportunities for each major commercial real estate sector in 2021.
No, the office isn’t dead. And it’s coming back better than before, with renewed focus on employee health and wellness and ample space for collaboration— that thing we’ve been so desperately craving for the past year.
Remote work is here to stay but so is the office—it’s all about flexibility moving forward. A recent CBRE survey showed that 67% of employees desire a balance between office and remote work.
Investors aren’t shying away from the office sector, with several deals having transacted over the past 12 months, including the purchase of a 50% stake in Bay Adelaide North by privately held Dadco Group.
Retail had a rough year, but 2021 will bring new opportunities in the sector.
While we can expect further high street store closures in 2021, new leases are being inked in their place, enabling emerging retailers to locate in sought-after areas that previously would have been beyond their reach.
The pandemic has spurred innovation in retail. Watch for technology to become more commonplace in stores to meet rigorous sanitation standards. And brick-and-mortar retailers will be intently focused on making their in-store offerings a seamless extension of the online experience.
Industrial keeps on trucking. Watch for continued growth in demand and construction. Warehouse requirements supporting e-commerce are expected to exceed 40.0 million square feet over the next five years.
Just one problem: there is nowhere near enough supply to meet that demand, which currently exceeds the total amount of leasable industrial space in Toronto, Montreal and Vancouver combined. So any development done in those areas will be hotly pursued.
Speaking of Toronto, Montreal and Vancouver, they will remain Canada’s tightest industrial markets in 2021, with availability rates around 2.0%; in Montreal’s case, 1.8%—a record low.
The Canadian multifamily market is attracting significant investor interest, including Crestpoint REIT and InterRent REIT’s recent $292.5 million purchase of 15 apartment buildings in Vancouver, a deal brokered by CBRE’s Lance Coulson
Investment volume in 2020 actually exceeded that of 2019 and CBRE forecasts Canadian multifamily investment volumes will continue to rise and reach $11.8 billion in 2021.
Fundamentals driving multifamily’s strong performance prior to lockdowns— robust population growth, limited supply pipeline, rising home ownership costs—remain intact, and in the case of immigration, are poised to accelerate this year.