Record-Breaking $50 Billion Year Forecast For Canadian Commercial Real Estate Investment

March 1, 2020 By hincer

CBRE is forecasting a record-breaking CA$50B year for Canadian investment, with Toronto and Vancouver leading the way.

According to the new CBRE 2020 Canada Market Outlook report, predicted Canadian investment will top 2019 by CA$5B, and a record-setting 2018 by CA$1B.

CBRE is predicting a record year for Canadian investment with Toronto leading as the most active market. “A relentless bull market, macroeconomic tailwinds and supportive immigration policies have allowed Canada’s commercial real estate market to gather serious velocity heading into the new decade,” said CBRE Canada Vice Chairman Paul Morassutti in a news release.

“There are challenges ahead, including rising rents, limited office and industrial space, new technologies and the all-important issue of climate change. But ingenuity across our industry has demonstrated that creative solutions and skillful management of these issues can ensure the real estate market’s ongoing success.”

The report from the commercial real estate services firm concluded that, in cities like Toronto and Vancouver, the cost of living will continue to outpace income growth, leaving homeownership out of reach.

“This has the potential to continue driving millennials and low- to middle-income workers away from downtown cores,” it said.

BRE predicts investment volumes in Toronto will rise sharply from CA$17.6B in 2019 to CA$19.9B in 2020, making it “the nation’s most active investment market in 2019.”

Industrial development in Toronto will remain high with a record-breaking supply of 14.08M SF, up from 9.09M SF in 2019.

“Despite industrial development at record levels, it remains insufficient to satisfy the pent-up demand in the market,” concluded the report. “A lack of available space due to pre-leasing will drive further rent growth with new demand to come from the industries that cannot locate away from the city.”

The busy Toronto downtown office vacancy rates would remain low (2.8%) in 2020, despite a sharp rise in supply as well  to 2.7M SF.

“Tight downtown market conditions have placed pressure on office rents to the point where at times they approach spot pricing,” said the report.