Healthy demand patterns across residential and commercial real estate boosting investor confidence
Canadian Economic Outlook & Market Fundamentals
First Quarter Update 2019
MISSISSAUGA, ON, April 25, 2019 /CNW/ - Positive momentum and strong interest in the multi-suite residential, industrial and office asset classes continued into the first quarter of 2019, according to the latest Research Report issued by Morguard Corporation ("Morguard") (TSX: MRC).
"The performance of multi-suite residential, industrial and office sectors have kept them as favourites of investors," said Keith Reading, Director of Research at Morguard. "Uncertainty and volatility in global economic dynamics seem to have had little impact on the Canadian commercial real estate business. A sustained momentum from the end of 2018 has kept the investment community confident that these markets continue to represent a relatively safe investment option."
The movement of retirees from single-family homes to the rental market, combined with international migration patterns, has resulted in significant demand pressure for multi-suite residential rentals. Combined with availability rates across the market projecting to hold at or near record lows, rent rates are expected to be driven beyond the all-time highs.
A similar lack of availability will continue to affect the office leasing market as national vacancy came to rest at 11.5 per cent at the end of March of 2019, down 40 bps quarter-over-quarter and 100 bps year-over-year. The downward vacancy trend was most evidenced in the downtown areas of Montreal and Vancouver, while in Toronto vacancy rested at an all-time low of 2.6 per cent. As rents continue to stand at the cycle-highs, investment confidence in the market continued with 16.0 million square feet of new supply in development, representing a high dating back almost three years.
"While the uptick in construction is welcome news for tenants searching for modern office space, the reality is it will be some time before there is significant relief," said Reading. "Competition for space will remain fierce. Prime development properties are likely to be fully leased – or very close to it – as they near completion."
Canada's economic activity slowed in the first quarter, keeping with the trend of the second half of 2018. Consumers spending has tracked a similar path, presenting a significant risk to the growth outlook. Consumer spending accounted for close to 60 per cent of Canada's 2018 GDP. Wage growth is expected to boost consumer confidence and help support a modest economic growth trend in the second half of 2019.
The First Quarter Update of the 2019 Economic Outlook and Market Fundamentals Research Report, released today by Morguard, provides a detailed analysis of the 2019 real estate investment trends to watch in Canada. The full report is available at morguard.com/research.
About Morguard Corporation
Morguard Corporation is a major North American real estate company. It has extensive retail, office, industrial, multi–suite residential, and hotel holdings owned directly, or through its investment in Morguard North American Residential REIT (TSX: MRG.UN), Morguard REIT (TSX: MRT.UN), and Temple Hotels Inc. (TSX:TPH). Morguard also provides real estate management services to institutional and other investors. Morguard's owned and managed portfolio of assets is valued at $21.0 billion. Please visit www.morguard.com or follow us on LinkedIn.
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SOURCE Morguard Corporation
For further information: K. Rai Sahi, Chief Executive Officer, T 905-281-3800; Keith Reading, Director of Research, T 905-281-3800; or email [email protected]