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August 30, 2021 - Blog Article
2021 Optimistic Outlook on the Canadian CRE Market

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The Canadian CRE market continues to thrive, with the first half of 2021 being particularly strong across all sectors. Industry experts are very optimistic across the board for all asset types for the remainder of the year.

CBRE’s president and CEO Werner Dietl and vice-chairman Paul Morassutti, together with CIBC World Markets Inc.’s Deputy Chief Economist Benjamin Tal, shared their optimistic outlook on the Canadian CRE market for the second half of 2021 in a recent CBRE webinar.

Canadian CRE Is Poised to Reset

Looking at every sector, and seeing continuous improvements and an overall optimistic mood, all the experts agree that the Canadian CRE is poised to reset.

REITs (Real Estate Investment Funds) are up this year, with both the TSX REIT index and the Dow Jones REIT index going north by 25%. Net asset values haven’t moved that fast, but they are heading in the right direction.

CRE Capital Market Reaching New Heights

The CRE capital market in Canada seems to be reaching new heights. Morasutti said the first half of 2021 was one of the strongest in the country in the last five years, and the entire year might end up being one of the best ever. All thanks to an increase in investment activity in the CRE capital market.

Tal agreed, saying that the CRE capital market is on fire, and it is going to be even stronger for the rest of the year. “We wake up and realize that Canadian households are sitting on no less than $100 billion of excess cash,” he added.

The markets are reopening, consumer demand is through the roof, and the country’s economy is bound to keep getting stronger.

The Looming Inflation Might Be Short-Lived

For the first time in decades, inflation might be a risk factor on the Canadian CRE market that investors, businesses, and individuals should keep an eye on. However, the experts believe the looming inflation might be short-lived. That is what the Bank of Canada is saying as well.

In case the inflation does not go down, CRE investors could face higher interest rates, but the Bank of Canada’s narrative is that such a situation would not last long.

Industrial CRE Continues to Thrive

The industrial CRE market in Canada is another sector that continues to thrive in 2021, with industrial real estate properties being the most sought-after assets.

In Montreal, the average net asking lease rates have increased by a whopping 44% over the last three years.

The city’s metro area has 4.5 million square feet under construction, with nearly all of it leased already. The availability rates keep dropping, particularly in the ecommerce and food and beverage industries.

Summary

The future of Canadian CRE continues to look bright, especially on the industrial side. It keeps opening up many opportunities for CRE investors, who can generate profits despite financial market fluctuations and the risk of inflation. The positive forecasts for the rest of 2021 might well continue for the years to come.