The fundamentals of Canada's commercial real estate has an optimistic outlook according to the property management and investment firm
For investors in Canada’s commercial real estate, there should be some positives in 2022, especially for two of the main segments.
Investment performance for industrial units and multi-suite residential rental properties have outperformed office and retail assets in 2021 and this is set to continue according to Morguard Corporation.
However, the firm’s research director, Keith Reading, believe that there will be interest in offices and retail units in the year ahead.
“As the economic picture improves in 2022, investors will broaden their investment horizons by looking to increasingly acquire office and retail assets,” he said.
Morguard’s outlook calls for the services sector to drive the rebound in the Canadian economy with output rising between 4.0% and 5.0% on an annualized basis.
It also believe that the labour market, housing market, and retail consumption will all support economic growth and be largely supportive of the commercial real estate performance trends.
Offices and retail improvement
Although office property sales were down 37% in 2021 year-over-year as uncertainty over return-to-the-workplace continued, Morguard is anticipating that tenants will take a longer-term view in 2022 and drive renewed investment in the segment.
Retail, while also impacted by reduced footfall and business failures, will also bounce back in 2022, the firm believes. With a more confident outlook, assets with necessities-based tenants will remain a prime target of investors.
Multi-suite success
The outperformance of multi-suite rental units will be fuelled by a rebound in immigration and post-secondary students, which have been impacted by the pandemic.
Meanwhile, the availability of industrial units for warehousing and fulfilment centres will remain tight despite a planned increase in construction.
