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With 2020 in the rearview mirror, Canadian CRE investors and business leaders are looking forward to a possibly brighter future in 2021. The COVID-19 pandemic had an immeasurable impact on the global economies, affecting people and businesses of all types and narrowing profit margins for all.

However, with the introduction of the vaccine, we’re looking at CRE market stabilization and a slow return to normal. Let’s take a look at the expert 2021 forecast by Avison Young of what this year may bring to the multi-family, office, industrial, and retail sectors and what this means for Canadian CRE investors.

Multi-Family Property Types Favored by Investors 

Canadian investors have long favored multi-family properties as they involve low risk and high reward. Despite the pandemic and the accompanying uncertainty associated with employment and the economy, multi-family property types have remained in good standing.

The demand for these properties remains high throughout Canada, and the expectations of this trend is expected to remain high well into 2021. With the support of the Bank of Canada and the imposed decision to keep interest rates at 0.23% by 2023, investments in multi-family properties are on the rise.

Offices Under a Question Mark 

The office sector was severely affected by the imposed measures to contain the COVID-19 pandemic. There was an increase in work-from-home (WFH) orders, and businesses with office expansion plans had to put them on hold.

Avison Young analysts forecast that we could see fewer employees choosing to return to the office (RTO) every day, even after the pandemic’s been dealt with. The idea that traditional workplace models returning is not likely for many businesses, as WFH has proven to bring unique benefits.

Furthermore, even with office supply being high right now, demand remains low. There are some tech companies making large space commitments in major hubs (Vancouver, Ottawa, Montreal and Toronto), while simultaneously issuing indefinite WFH plans and putting space up for sublease.

As of third quarter of 2020, the national vacancy for office was 10.9% and it is forecasted that that will rise in 2021 to 12.0% by year-end. The unknown continues to be if tenants will RTO or WFH post-COVID.

Retail Space Best Redeveloped as Mixed-Use Property 

The pandemic caused the most significant problems for the Canadian retail market. Shortened hours, social distancing measures, and ordered closures have impacted retail, unlike any other category.

Businesses in retail mostly managed to stay afloat by moving to the world of e-commerce or coming up with innovative ideas to stay open, including, offering deliveries and curb-side pickups where possible.

While 2021 is expected to be a slightly better year for the retail market, investors are cautious. It is expected that the best move is repurposing retail space as a mixed-use space. With available retail locations, offices, and residential space, those in the retail market stand to improve their outlook.

Industrial Sector Shows Resilience Through the Pandemic 

If there was one sector that thrived amidst the pandemic, it is the industrial sector. Industrial vacancy remained virtually at all-time lows. Toronto saw a mere 1.1% vacancy, Vancouver, Montreal, and Ottawa, only 1.3%, 1.6%, and 1.8%, respectively.

Industrial property rents remained largely stable through 2020, rising mostly around metro areas. The surprising resilience and stability of the industrial property market mean that 2021 brings good news for the sector.


Although it will be a while before things fully return to normal, things are looking up in the Canadian CRE market. Robust responses to the pandemic by the government, low-cost financing, and the abundance of capital on the sidelines ready to acquire assets will occur as investors become better informed. There are also multiple sources of capital in the market and demand for Canadian CRE is growing, especially for mixed-use, industrial and multi-family properties.

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