Canada’s rather tight supply of commercial properties along with a 4-decade low in unemployment rates will continue stoking intense demand in the space for much of 2019, according to Avison Young Canada Inc.
The brokerage’s latest report indicated that as of 2018, commercial property investment nationwide exceeded the previous high of $36 billion in the previous year to reach a new record.
“We continue to feel very positive about opportunities in the real estate environment for the year ahead,” Avison Young Canada CEO Mark Rose said earlier this week, as quoted by Bloomberg.
“More capital is available to move into real estate debt and equity than at any other time. The next wave of investment is not a matter of if or when -- it’s just a matter of price.”
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Especially notable is the industrial sphere, which saw nationwide vacancies shrink to a historic low of 2.9% near the end of 2018. Vacancy levels in the leading markets of Toronto (1.3%) and Vancouver (1.5%) were actually the lowest in North America.
Industrial construction also accelerated to more than 20 million square feet in 2018, significantly greater than the 14 million sq. ft. in the year prior.
Office vacancies also fell in nearly every market across Canada, pulling the national average down to 11% by the end of 2018.
An even more feverish pace of construction, nearly doubling last year to more than 22 million sq. ft., is projected to slightly move up the office vacancy rate to 11.3% in 2019 – with the caveat that a significant proportion of this might be in the suburbs, considering space constraints and rent hikes in downtown areas.