BusinessIs it a good time to invest in commercial real estate?

Mary ChapmanNovember 14, 20197 min

Canada’s commercial property boom is well underway in 2019. It’s no doubt helped by a short supply of properties and the lowest unemployment rate in four decades.

Toronto (1.3%) and Vancouver (1.5%) posted the lowest industrial vacancy rates in North America in 2018 and are projected to rank among the tightest three markets this year.

These 10 cities in Canada are leading in terms of investment prospects according to PWC:

  1. Toronto
  2. Vancouver
  3. Montreal
  4. Ottawa
  5. Quebec City
  6. Winnipeg
  7. Saskatoon
  8. Halifax
  9. Edmonton
  10. Calgary

But of course, just because your city isn’t listed doesn’t mean it’s not a good time to invest.

Here’s what you need to know about the various types of properties you could invest in.

Office

Office properties had a 10.5% national vacancy rate in the second quarter of 2019. The main driver in leasing office space right now is the tech industry. Investors should look for spaces that lend well to the co-working trend of flexible workspaces.

Rental housing

With the new tighter mortgage rules and rising interest rates, many more Canadians are turning to rental housing. These days, the demand for rental properties surpassesthenumber of properties built for home ownership.

David Giovanniello, Sales Representative at Century 21 in London, Ontariosays, “It is my opinion that real estate investing is the only practical way for most Canadians to get ahead.  Interest rates are at all-time lows making it an amazing time to leverage the banks’ money. Most Canadian cities currently have low available rental accommodation inventory and extremely low vacancy rates, causing rents to increase well above historic norms.  If your goal is a long-term investment, then I firmly believe you cannot beat real estate. With investment in real estate you make money three ways: appreciation, cash flow and mortgage pay down.”

Retail

The retail sector has seen a lot of disruption in the last 10 years.

We’ve seen big brands like Gymboree, Payless Shoes, and Home Outfitters close their doors forever. Some of these spaces have been replaced with non-retail tenants.

It’s certainly an interesting time to get involved in retail real estate investment. Investors will need to rely on data analytics to help them wade their way to success in this sector.

Industrial

The giant shift to online shopping has made the need for distribution centres grow exponentially; especially distribution space for large big-box stores.

Self-storage facilities may be an area to keep your eye on due to shrinking home sizes. There’s also been a rise in the need for cannabis production sites, and large data centres (with large electrical capacity) for cryptocurrency mining.

No matter what type of commercial real estate you have an affinity for, now is the time to get on board.

Do you invest in commercial real estate? We’d love to hear your thoughts. Drop them in the comments below.

Note: This is intended to be used as general information only and does not constitute investment advice. Please conduct your own research before making any investment decisions.

Mary Chapman

Graduated from the University of Toronto with an Honors BA English Specialization and has completed several publishing courses at Ryerson University. She is a proofreader, editor, and content writer based in London, Ontario.

Leave a reply

Your email address will not be published. Required fields are marked *