Despite economic headwinds, the Canadian commercial real estate market continues to evolve from coast to coast. Its three main sectors – industrial, office and retail – have held steady, according to the RE/MAX 2023 Commercial Property Report, which takes a deep dive into current trends and first-quarter performance across 12 markets, from Vancouver to St. John’s, as the landscape evolves post-pandemic. Positive indicators suggest an upswing “may be in the cards for the back half of the year.”
Industrial real estate poised for dynamic growth
The brightest star in the commercial real estate realm is the industrial sector, outperforming almost every asset class in markets across the board. It is experiencing strong sales and lease activity, according to the recently released RE/MAX report. A robust spillover of demand is sparking new investment in secondary markets as investors and end users expand their search for distribution and warehousing outside key urban centres.
Christopher Alexander, president of RE/MAX Canada, says those areas and communities stand to attract new people and more employment.
“It bodes well for local economies,” he says. “Some of the challenges will probably be minimal because the land is a lot less expensive than highly populated, high-demand cities like Toronto or Vancouver.”
The report also shows inventory levels remain low and land sales remain solid, despite higher interest rates and construction costs. And, like the current mood of the stock market, the attitude is bullish and positive.
“There’s a real attitude of ‘let’s do a deal,’” says Elton Ash, executive vice-president at RE/MAX Canada. “The deal makers are out there, working hard and getting results. That holds true whether you are a landlord or tenant, a lessor or lessee, buying property or selling it.”
RE/MAX holds that the industrialization of land in the suburbs makes sense, especially for setting up distribution points and transportation hubs. One factor inspiring the trend is the growth in consumer demand for products. “It’s an interdisciplinary connection,” says Ash. “It’s an exciting trend that will continue to grow as consumerism grows. Companies need to be able to solve supply chain issues, which were accentuated during COVID. It showed the need for the outlying areas to be better tooled to react.”
Retail sector reinvents itself
It wasn’t too long ago that in-person shopping was almost considered a thing of the past, but the RE/MAX report shows the retail sector has found a new groove. Its strength and resilience were somewhat unexpected – “surprising,” says Alexander.
“Despite how well online shopping can work for people, physical stores and malls haven’t been as impacted as you might think,” he explains. “The very definition of what a store is is being redefined. It can be more of a showplace that helps consumers get the information they need to make their purchases online. We’re also seeing the rise of multi-use complexes, with the number of residential applications on commercially zoned property growing across the country.”
Consumer preferences that favour a live-work-shop lifestyle and bricks-and-mortar shopping experiences are also driving change in the retail sector, underscoring the findings of the RE/MAX report, which shows 11 out of 12 markets reporting solid activity in retail nodes and shopping centres.
source: theglobeandmail