Today’s commercial real estate market is more competitive than ever, and the demand is only growing. This is especially true in urban areas, where developers are making room for new businesses and industries. In fact, the rate of investment into the Canadian commercial real estate market boomed last year. In the first six months of 2018 alone, some $26.8 billion in transaction closing volume was recorded.
Of course, most of this activity is centred in the Greater Toronto and Vancouver areas. Both office and industrial commercial properties have seen high rents and low vacancy rates. This means that investors will continue to build to accommodate more companies and organizations. And this growth is showing no signs of slowing down anytime soon.
Office Space
Perhaps the most notable sector in the Canadian commercial real estate is the office space sector. It’s at almost record levels over the past 18 months, and it continues to look promising to investors. According to Keith Reading, a director of North American real estate company Morguard, “The big issue has been a lack of space in most of those markets. Demand has been strong. That’s pushed rents steadily higher. Vancouver and Toronto are the big stars; there’s no doubt. A lot of that is growth in tech and also this influx of shared workspace companies, too.”
As long as demand continues to increase, the Canadian commercial real estate market is expected to boom in the upcoming months. A lot of businesses are still short on space, so they are looking for the best offices and workplaces to accommodate their growing operations. Rising rents and full or almost-full buildings mean that demand for workspaces will continue to increase.
Industrial Sector
Canadian commercial real estate is about more than just office space; you also have to consider the industrial sector. Since industrial businesses and organizations often need a large amount of space, many companies are struggling to find buildings large enough to accommodate them, particularly in the busy downtown areas. In fact, there have been record-low vacancies over the past months, which indicates that this kind of growth is not expected to slow anytime soon. Businesses are looking for extra space, and investors are going to provide as long as there is continued demand.
Retail Space
Retail outlets are experiencing more risk these days as more companies shift to an online model. However, commercial real estate for retail businesses is still on the rise despite this increased risk in the sector.
Although online sales may be driving growth in many retail companies right now, Reading claims that the market is also seeing a correction in the cycle. “As we know with cycles, you can’t see growth indefinitely. There’s got to be a correction,” Reading says.
As commercial real estate in Canada continues to thrive, realtor groups are seeing more businesses, which will only promote more growth.
