The Canadian commercial real estate is booming—with rents in most areas increasing.
This brings bad news (and pressure) to tenants who want to squeeze the most out of the spaces they occupy. But it’s also good news to investors. As financial markets reach all-time highs, many investors start to favour the Canadian commercial real estate market to achieve stability and consistent growth.
Owners, developers, and investors need to start to rebalance their portfolios, rethink how they can find the right deals, and reinvent how they do business. Perhaps staying on top of these 2018 commercial real estate trends could help:
The “Gen Z Effect”
Generation Z is your customer right now—even if their parents are paying the bills. They are two billion strong. They have billions in spending power. And they use social media as their personal megaphone.
For retail and commercial real estate investors to succeed, they will need to meet the needs of this gadget and Internet-driven generation. In addition, while Millennials want collaborative and open workspaces, Generation Z wants more structure, which means there should be a return to cubicle offices and personal workspaces.
Multifamily Remains a Strong Investment
With the growing need for more affordable rental units for Millennials and Generation Z, commercial buildings for sale like multifamily housing remain a strong investment in Canada. These generations aren’t buying homes, and it is getting more expensive to build new apartment units. Plus, multifamily houses can be converted to retirement homes in the future.
There’s greater cash flow with multifamily homes as well, and the rent-to-purchase price ration is better with multi-unit investments compared to similarly priced single-family houses.
The baby boomers are leading this trend as they are approaching retirement and are looking for investment vehicles that offer stability, cash flow and low maintenance investments.
Increased Demand for Foreign Investors
The investment activity in the Canadian real estate market declined slightly in 2017, but the number of foreign investors continues to increase. Foreign capital also accounted for 27% of all transactions over $10 million, and this is expected to rise in 2018.
Many factors play a role in the increase of foreign buyers, including a relatively strong economy and lower investment prices.
Foreign buyers are particularly investing in commercial real estate in Canada’s most crowded cities such as Vancouver and Toronto. These cities have some of the lowest downtown vacancy rates across North America.
Canadians are shifting toward a “greener” ethos, with tenants, investors, and property developers seeking out sustainable options. An increased awareness of climate change and the need for everyone to do their part drives his trend. The result is that green properties are now considered to be more marketable and attractive compared to other types of investment.
The year 2017 started with a big question: Will the Canadian real estate market crash? But this year started with a huge sigh. The trends are nearly the same as last year’s, only it’s flat. That means a possible re-emergence of a more boring—yet stable—Canadian real estate market.
And as an investor, you want to be sure of your next move. Let Vancouver Business Brokers help. Call us for real estate brokerage services.