Speed: Not all Canadian properties are created the same – the prospects for these market segments are almost ‘abysmal’

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Single-family homes may be a hot commodity in Canada these days, according to a new report from PricewaterhouseCoopers, but smart investor money covets warehouses and distribution centers even more.“Logistics, warehousing and fulfillment are the big winners this year,” the management consulting firm said in its Emerging Trends in Real Estate 2021 report. “This segment of industrial real estate has remained resilient throughout the year. length of the pandemic – in large part due to a surge in demand from e-commerce, food delivery services, home improvement retailers and, to a lesser extent, medical supply companies.

Over 1,600 real estate professionals participated in the survey, 38% of which were either private owners or commercial and multi-family real estate developers.

Canada continues to experience tight market conditions in the industrial real estate sector, with vacancy rates of 3.5% nationally, well below the 10-year average of 5.1%.

Vacancy rates in the GTA stand at a paltry 1.7%, forcing a survey respondent to say “I can’t find enough.”

“Many interviewees see rents increasing significantly (in the field of industrial real estate). Six of 10 markets saw an increase in rental rates from the previous quarter, and the national average net asking rent was up nearly 10 percent from the same period last year, according to the Property Council ) CBRE, ”said PWC.

Interest in warehousing and order processing is constant across the country, with centers like Calgary, Ottawa and Halifax attracting strong investor interest.

“The biggest challenge is finding available space, although some interviewees mentioned possibilities of adapting mixed-use properties to accommodate realization,” said PWC.

Other real estate investment nuggets focus on moderate income / employee apartments, doctor’s office, single family rentals, and low income apartments.

On the other end of the spectrum, commercial real estate is grappling with a series of store closings and major clothing brands disappearing from the scene.

“Shopping centers can convert to residential or mixed-use properties, potentially using some of that space for warehousing, distribution or fulfillment – including last mile delivery – to meet the growing demand for online shopping, ”said PWC.

Overall, the outlook for investment in student accommodation, luxury hotels and upscale hotels is near “abysmal” levels, according to PWC.

None of the PWC respondents recommended purchasing purchasing power centers, regional shopping malls and malls, while student housing, downtown housing, and urban / large retail also received a lukewarm response from investors.

“For senior housing, some interviewees said they would avoid this, especially given the impacts of COVID-19 and the complexity of operating these homes,” PWC noted, although the outlook for long term appear promising.

“For student accommodation, respondents also face challenges,” according to the survey. “The shift to virtual learning in post-secondary schools is dampening demand, although many interviewees believe the long-term trend is positive.

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