[caption id="attachment_1367" align="alignright" width="300"] Image Source: Kevin Cappis[/caption]
About of new trends all colliding at once could set the stage to bring many Canadian commercial real estate investors back home, along with many investment dollars. So what is the catalyst for these new trends and how do they signal the best investment opportunities for both Canadian and global investors?
A recent PwC report on real estate trends for 2014 highlighted how significant of a force Canadian property investors have been on the global map in recent years. This data, which included surveys by the Urban Land Institute, placed Canada as the top investor in U.S. real estate. Most surprising was the fact that the bulk of this capital was being put into U.S. office properties, during a time when neither the U.S. nor office investments had a reputation for stellar returns.
Certainly many Canadians who invested in U.S. residential property over the last 7 years are finding that they are only now able to recoup enough of their investment to exit properties without money coming out of their pocket. They are discouraged by U.S. housing and are excited about the opportunity to bring their investments closer to home.
Recent news coverage has continued to highlight the froth and dangers of bubbles in top foreign markets such as Hong Kong and London. Few Canadians have found it wise to put their capital in these overseas "havens" for quite some time. In fact, expect to see quite a few wealthy global investors compound these bubble fears by liquidating their investments and bringing their cash back home.
Technology is the most prominent driving factor in the world today. Economists and analysts expect to see growth where the tech, talent, and entrepreneurial spirit are strong. Google recently acquired more office space in Canada, and entrepreneurial Edmonton has been scaling its way up the ladder as a hot startup city. In the meantime, the current administration in the U.S. seems to be doing all it can to crush capitalism and small business south of the border. Next to migrating north to Canada, American entrepreneurs' best hope is apparently setting sail on their own barges off the coast in order to avoid crippling regulation, heath care burdens, and taxes.
So what should returning Canadians be looking to invest in? Many are flocking to Alberta and Edmonton in particular. The city is undergoing major development with all sorts of new office, entertainment and multi-family projects underway. However, most expect this activity to peak in the retail sector. A Net Lease Property Report from the 4th quarter of 2013 suggests that "franchisee credit restaurant properties" are one of the bright lights to look for, while others are seeing the best growth potential in local community shopping plazas.
The bottom line is that as global capital begins to be re-allocated and Canada become an even more attractive commercial real estate destination, we will see the direct investment in Edmonton rise. Anchored by the arena and new LRT extensions, it can be expected that local housing, office, and hospitality sectors will see consistent growth, bringing the retail sector up as well.