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December 08, 2020 - Blog Article
2021 Looks Bright for the Canadian CRE Sector

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2021 Looks Bright for the Canadian CRE Sector

The Canadian CRE sector has been growing for years, managing to remain strong despite the ongoing pandemic. According to Andy Warren, a PwC real estate research director, Canada’s CRE executives are highly optimistic about 2021 as well.

In collaboration with Urban Land Institute (ULI), PwC conducted a survey on emerging real estate trends. Here are some of the most important findings from their report, which show that 2021 will be an excellent year for Canada’s CRE sector.

Primary Asset Classes of Commercial Real Estate

Primary asset classes of commercial real estate include industrial, retail, hospitality, multifamily, and office assets.

Industrial CRE assets are likely to continue their 2020 growth next year, meaning they will still be excellent investment opportunities.

The major shift to online shopping during the pandemic is one of the main factors for their outstanding performance. Businesses are shortening the last-mile delivery, so they invest in more warehouse space and other industrial facilities.

The pandemic hit retail and hospitality the hardest, but both sectors are slowly recovering. Those who pivot the right way, that is, combine physical and online space, will continue to be successful in 2021.

The multifamily sector is likely to grow as well, as people are looking for more affordable housing, especially now that most of them work remotely.

Last but not least, offices aren’t going anywhere, even with remote working. Medical office space showed particular growth this year and will likely continue to be a good investment opportunity.

Remote Working Will Positively Impact Local Retail and Office Space

In order to address health concerns, businesses are increasingly making offices COVID-ready. They are also opening new workspaces to meet the needs of employees who prefer working closer to home.

Because of physical distancing and future growth, 51% of CRE executives in Canada (PwC/ULI survey respondents) plan to invest in more retail combined with office space in the next three years.

The trend is showing that as more people look to relocate to less-densely populated areas, and as the trend continues, so will business. Roughly 43% of Canadian CRE executives agree that more mixed-use properties will open in less-densely populated areas.

The Most Promising Commercial Real Estate Niche Assets

Canada’s most promising CRE niche assets include mixed-use commercial properties, single-family rentals, self-storage, life sciences, and production studios.

Mixed-use properties that combine retail with medical office, with traditional office or with housing will continue to thrive. 

The single-family rental sector is expected to grow mostly because of the rise of remote work. People are looking for bigger properties to accommodate their home offices.

Many of those living in smaller multifamily and single-family homes are struggling with space, which is why the need for self-storage facilities is likely to grow in 2021.

Investing in life sciences will also remain strong next year, primarily due to the ongoing vaccine development for COVID-19.

Given the increasing demand for online streaming services, investing in production studios for TV and film will be quite profitable, too.

Summary

CRE investors should definitely look at Canada if they want to seize profitable investment opportunities. As PwC and ULI have shown, all the Canadian CRE assets look promising and are likely to perform remarkably in 2021, as they have to date.