The investment performance of Canadian Commercial Real Estate continued to improve throughout 2021. To some it rebounded better than expected. Although there are still sectors that are working to improve leasing, investments are looking bright for investors.
The worst seems to have passed us. That is something all the stakeholders, companies, and investors in the CRE market will take note of in the upcoming year. Even with 2022 just barely rearing its head, we are already seeing even more improvements in the market. The 2022 Canadian Economic Outlook & Market Fundamentals Report has provided valuable facts and insights indicating that the CRE market will remain strong in 2022.
Here are some of the key factors for such positive trends.
Retail Will Continue To Improve
Even during the pandemic, pharmacies and grocery stores have achieved good results. However, large malls and retailers will have multi-use purposes in the future. That includes things like music halls, indoor parks, fitness centres, fulfilment centres, and so on.
Developers will repurpose retail space, and with enough innovation and vision, they will be able to bounce back and achieve great results. Spaces will go through a digital overhaul to cater to the needs of modern digitally-native consumers, and retailers will offer exclusive shopping appointments and focus on creating a better in-store experience.
That is imperative now when e-commerce will not be able to supply all the products during the holidays. On top of that, customers love holiday shopping in-store, as it enhances the whole experience.
Office Spaces Will Be Reinvented
Office spaces are not what they were, as the pandemic has forced companies to analyze how they fit into their overall ecosystems. Even though certain businesses will continue to operate remotely after the pandemic, many will go back into offices in 2022 and in the future.
The demand will likely not be as high as before, however given that this segment has been impacted the most, the number of office spaces is expected to still grow in great measure. Office CRE spaces are being redesigned into inspiring destinations where companies can boost employee relationships, facilitate innovation, and improve creativity.
The office CRE segment is looking to provide spaces that will fit the post-pandemic norms. That includes hybrid working, new social activities, reshaped collaboration, and stronger company cultures.
Industrial Real Estate Will Continue To Be Fueled By E-commerce
Most consumers turned to e-commerce when the pandemic started. The increased demand for e-commerce products has created a need for more distribution centres, warehouses, and other similar industrial spaces.
Industrial commercial real estate is currently one of the most successful asset classes because customers want to order products online and get them delivered to them or pick them up in stores. This trend will continue in 2022.
Pre-Pandemic Numbers Are Expected For CRE in 2022
Real estate companies will see improved numbers by the end of 2022, but reports indicate that the results will be even better at the start of 2023. With the worst periods behind us, various market segments are returning to their numbers before the pandemic.
The road ahead will show continuous growth, and everything will go back to normal over time. Companies are adjusting and putting in place the necessary strategies to get them back to where they were in about two years.
We are at a turning point where ambitious entrepreneurs in CRE will be able to turn a great profit. The fundamentals of retail CRE are stabilizing and expanding, while industrial real estate will outperform in 2022 with continuous growth. With loosened restrictions and the return of physical presence in stores and offices, we can expect strong investment activity and performance in CRE throughout 2022.