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Although many commercial real estate markets in 2020 faced challenges, Canadian CRE has still proven to be quite resilient in the midst of the pandemic.
Multi-family, industrial, and mixed-use spaces have exceeded all expectations, becoming the industry’s shining stars in 2021. Re/Max of Western Canada released their commercial real estate report this month in March 2021 highlighting the current state of CRE markets across Canadian provinces. Lets review the trends in seven major centers in Western Canada.
Industrial Sector the Top Performer
From Vancouver to Winnipeg, the Re/Max report noted an increase in demand for reliable industrial real estate since the onset of the pandemic, primarily driven by the rise in ecommerce.
With retailers forced to shut down in 2020, the only way for them to stay afloat was to invest in ecommerce and offer online orders and fast shipping. And for that, they needed warehousing and fulfillment centers across Canada, especially if they wanted to stay competitive against ecommerce giants like Amazon and other similar multi-national companies.
Regardless of what the future holds regarding the pandemic, ecommerce is expected to keep thriving. The industrial sector is set to remain the top-performer in the Canadian CRE market.
Heightened Demand for Multi-Family Residential Property in Canada
The market report highlighted that the second strongest sector in Canadian CRE were multi-family residential properties. The demand for such properties remained consistent throughout 2020 and well into 2021. Edmonton and Calgary markets proved to be especially attractive to investors due to the higher CAP rates and lower values.
The stable demand for multi-family properties in Canada and uncertain retail future is even pushing mall landlords, and owners to consider redevelopment plans and include multi-family spaces on their properties.
Mixed-Use Spaces on the Rise
Besides using redevelopment plans to introduce multi-family spaces on their properties, many landlords and property owners are looking into expanding their mixed-use spaces post-pandemic. Diversifying seems to be the name of the game.
The movement has already gained momentum in the US, so it’s only a matter of time before Canadian landlords get in on the action. Expanding parking capacity and introducing industrial spaces are just some of the go-to options that have proven to be the most lucrative. By the end of the year, we’re expecting an unprecedented rise in mixed-use spaces regardless of where the pandemic’s headed.
Trends are still a little unpredictable, but the future is bright for the Canadian CRE market. Innovation and diversification are the main methods for rebounding after the pandemic and will help to maintain a profitable commercial real estate portfolio. Market trends and experts agree that Canadian CRE will continue to show resilience in the face of the pandemic.