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June 21, 2018 - Blog Article
Canadian Property: Mixed Use Investments Becoming More Attractive

Interest continues to grow in mixed use investments as a variety of factors combine to make these properties more profitable. Individual investors, funds and developers are all seeing more advantages in the mixed use space as the following factors forge together. Capital Flows Capital is plentiful and cheap for businesses right now. Banks and lenders have a favorable attitude towards lending to small businesses that are expanding, while large corporations are using this leverage to buy back shares. This is great for mixed use developments, which can incorporate retail and office space.

Need for Rental Apartments High housing prices continue to put the squeeze on individuals, while rising interest rates and new mortgage rules continue to restrict the ability of regular home buyers to get on the property ladder or move up. This is forcing more Canadians and North Americans to favor renting versus home ownership. Population growth and migration is almost certain to compound the need for rental apartments, which can be built in to new mixed use developments. This is only going to be fueled further with the Canadian government aiming to increase immigration by 50%.

Zoning Changes In addition to banks and lenders in favor or redevelopment to meet the growing demand for rental housing, the local governments are also in favor of redevelopment. For example, zoning changes are increasingly being granted in order to facilitate the development, redevelopment and use of properties that have laid idle. Many of these properties could have higher and better uses as modern mixed use properties. This dense building can be great for more revenues for retailers and taxing authorities.

Creating Community By anchoring retail, office and rentals together developers are able to create stronger mixed use communities.  This strategies attracts a more loyal tenant with a more reliable income stream. There are especially great opportunities here for existing properties that can add rental apartments above street level retail, and who can accommodate modern office spaces like coworking companies.

Summary While there may be growing challenges in Canadian property for regular home buyers and small residential property investors, the mixed use frontier presents great income and growth opportunities. Banks are lending money to support smart redevelopment. Tenants desire a community where many of their needs are met. Retailers want a strong customer base to support expansion and renewal of their leases, and property investors want a return on their investment. Those who are not taking advantage of this may be missing out on some of the best property performance over the next few years. Timing is everything. Population growth, the constant need for affordable rentals, and adjustments made to how we shop, work and live can provide a positive income stream. This maybe the right time to explore invest in mixed use properties.