We recently reviewed CBRE’s predictions for Commercial Real Estate in Canada for 2019 and we’re happy to share some of its highlights. Boiling it down, here’s what the coming year looks like:
- High demand for commercial property in gateway markets (Toronto, Vancouver) forcing prices up
- 10-year lease terms (pushing towards 15-year terms) with top pricing are now standard
- 7.3 million+ sq. ft. of office space under construction in downtown Toronto/ $2.9 million + sq. ft. in Vancouver (both have lowest vacancy rates in North America)
- $6.6 million (Toronto) and $5 million (Vancouver) of industrial space is under construction
- 64.8% of above is pre-leased due to pent-up demand
- Confluence of issues restraining more development – record land prices, increasing development charges, rising material and labour costs, prolonged and more involved planning and approval process
- Expansion of three specific sectors are outpacing availability of space: coworking providers, technology companies and logistics distribution firms
- Need innovative and creative approaches to workplace strategies, business planning and living arrangements to adapt to a shifting landscape
- Coworking is strongest driver of the office market – next frontier is to leverage customer data to customize service and facilitate day-to-day operations through investments in analytics and other technologies
- Apartment sector could introduce co-living concepts in 2019 (modeled after student dorms with private furnished bedrooms opening onto shared kitchen and living space)
- Industrial sector demanding specialized facilities for last-mile delivery, product returns, reverse logistics – potential for two-storey industrial distribution centres
- Food Halls will be popular
- Real estate industry’s adoption of Proptech (Property Technology) being developed for all aspects of the sector – property management, leasing market research and investment
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