3 Emerging Trends that Could Spark Growth in the Canadian Commercial Real Estate Market
Economic growth is the one common theme that is consistent across commercial real estate investors. As financial markets reach all-times highs throughout the globe, many investors have begun to favour the Canadian commercial real estate market as a means of achieving generating stability and consistent growth.
Here are 3 emerging trends that could spark increased growth in the Canadian commercial real estate market.
1.) Increased Demand from Foreign Investors
Per CBRE, 2016 was a record-breaking year for Canada with approximately $34.7 billion in commercial real estate transactions. Although it’s estimated that investment activity might decline slightly in 2017, the demand from foreign buyers will continue to increase. Last year, foreign capital accounted for 27 percent of all transactions over $10 million and could be expected to rise depending on the global economic trends.
2.) Uncertainty with US & European Markets
Many investors have been attracted to the stability of the Canadian commercial real estate market given the geopolitical and economic uncertainty associated with the United States and its European counterparts. “The level of uncertainty that we see globally is at an all-time high. I would include geopolitical uncertainty and economic uncertainty”, per Paul Morassutti, executive vice president and executive managing director for CBRE in Canada.
This sentiment is based on the perceived lack of direction with America’s foreign and economic policies, as well as the uncertainty of several major economies within the European Union, including the United Kingdom, France, Greece and Italy.
The increased desire for consistency and security among foreign investors could signal increased growth for commercial real estate markets across Canada.
3.) Increased Competitiveness for International Companies
Several major Canadian cities have been adamant in their desire to attract Amazon’s second headquarters, which boasts up to 50,000 jobs and more than $5 billion in additional investment.
Although many experts estimate that the probability of a Canadian city securing the new location is low due to a shortage of skilled workers and government subsidies, when compared to major American cities.
Regardless of the outcome of Amazon’s HQ2 initiative, it’s clear that Canadian cities are serious about attracting foreign multinational corporations as catalyst for growth in the months and years ahead.
In summary, investors can expect to see consistent growth across their portfolio as foreign capital continues to flood into commercial real estate markets throughout Canada, as other foreign markets continue to underperform.