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October 02, 2018 - Blog Article
Commercial Real Estate - Canada Becoming The New Silicon Valley

Canada is quickly becoming the next Silicon Valley, as the commercial real estate market in the nation has become one of the major beneficiaries. Here’s what’s happening now…

 

 

Shopify

Recently, Shopify announced it will invest an additional $500M in office space in Canada. The new move potentially adds almost 700,000 square feet of commercial real estate to Shopify’s Canadian footprint. The rise in online shopping has benefitted brick and mortar real estate in Canada.

 

Amazon

Amazon has also announced it is expanding its footprint with another 450,000 square feet of warehouse space in Canada. This trend is only expect to continue as online powerhouses need more storage and distribution centers, as well as testing new physical storefronts.

 

Netflix

Netflix says it plans to exceed its own $500M commitment to investing in Canada. Not only is this likely to include a sizable amount of Canadian commercial real estate, but tens of millions in developing local talent and employment as well. That’s in addition to helping elevate Canada on the international map with exclusive Netflix films and series.

 

Land for Employment is Shrinking

Land specifically dedicated for employment use in Canada appears to be shrinking. While any rezoning in favor of residential multifamily or mixed use may help alleviate the nation’s housing affordability crisis, this will also limit supply of business use property, and in turn increase its value for owner/investors.

 

Marijuana Madness

Cannabis companies have been racing to secure local shops and locations to accommodate customers. Firms like Tilray have seen this spike their value by 800%. Shoppers Drug Mart has also received its marijuana license from Health Canada. This popular chain with locations in many Canadian shopping plazas could help anchor and boost performance of those commercial property assets.

 

Increasing VC Investment in Canada

Global venture capital firms also see Canada as the new frontier. According to Pitch Book, Canadian investment deals with US venture capital participation are up by over 43%. During the first half of 2018 VCs plowed $1.38B into startups across 178 deals. The founder of Salesforce has also pledged to invest $2B into Canada.

 

Summary

It’s great to see Canada attracting large-scale investment from around the globe, and from the world’s leading tech companies and VCs. This is not only helping employment in Canada, but is also making commercial real estate investments even more valuable with major CRE players, like ReDev, taking advantage of the positive change happening in the Canadian economy. Anytime tenant demand outpaces supply, it creates an opportunity that ReDev and its investors enjoy benefitting from.