Limited supply and low vacancy rates create competitive environment for commercial space in Western Canada, according to RE/MAX report
28 Oct, 2014, 06:00 ET
KELOWNA, Oct. 28, 2014 /CNW/ - Demand for commercial real estate continues to outpace available supply in Western Canada and the GTA, according to a report released today by RE/MAX of Western Canada.
The RE/MAX Commercial Investor Report 2014 highlights market trends in seven key cities/regions across Canada. The report shows that in most major centres much needed supply still under construction matched with lower vacancy rates is limiting sales activity, as compared to the previous year.
"Despite supply challenges, the western Canadian market continues to hold steady across all products in the commercial sector, with measured increases in some markets supported by foreign investment interest, economic growth due to higher employment, expansion of resource development and a strong desire to increase downtown core density," said Elton Ash, Regional Executive Vice President at RE/MAX of Western Canada. "Low interest rates also continue to play a role, as lending flexibility is enabling more investors and buyers to get into the market."
There is a strong interest in land sales and accumulation of several smaller commercial units to buy and hold for future development or to build to suit, in Greater Vancouver, Saskatoon, Winnipeg and the GTA.
Retail storefront demand is also on the rise in most markets, with the exception of Greater Vancouver, where small businesses are choosing to anchor to shopping centres to generate traffic.
Momentum has remained in an upswing across Greater Vancouver, countered by a low inventory; foreign investment, specifically, continues to be a key driver of growth. As with most markets, new property coming online will increase vacancy rates in the coming years, as will the decision by baby boomers to sell their businesses or properties as they approach retirement.
Across Alberta a high growth rate of the economy is driving commercial market growth; however, the recent drop in oil prices may influence the market in months to come. Calgary's current lack of inventory can be attributed to rising values, thereby increasing the demand for commercial real estate, specifically in retail and warehouse space for e-commerce and retail. Similar to other markets, foreign investment interest in Calgary is high.
The Edmonton market has seen a sustained period of exceptionally low vacancy rates, creating a hospitable environment for real estate investment. Rising income per capita, coupled with its significant gains in employment and relatively low tax levels, has made it a desirable destination for many inter-provincial and international migrants.
In Saskatchewan, high employment rates and higher incomes per capita translate to growth in both Saskatoon and Regina where land sales for future development continue to show strong demand from a range of investors, with offshore investors typically looking at long-term hold positions in Saskatoon and local owner-operator purchases in Regina.
Winnipeg's single tenant industrial buildings for investment or occupation and multi-unit residential properties are highly coveted and drawing multiple bids, while a new trend in Winnipeg has been the redevelopment of older properties to reflect the modern designs of newer buildings.
Higher commercial lease and sale prices across the Greater Toronto Area are a result of attractive interest rates and demand for retail storefront remains high in central Toronto, where densification and the influx of young people are generating demand for small storefront space.
The full RE/MAX Commercial Investor Report 2014, complete with market activity summaries is available here: http://download.remax.ca/PR/CommercialInvestorsReport2014.pdf
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SOURCE: RE/MAX of Western Canada
For further information: To coordinate interviews, please contact: Wade Paterson, Social Media/Communications, Coordinator, RE/MAX of Western Canada, O. 250.860.3628
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