Demand for industrial space in Vancouver is so voracious that
CBRE believes it could run out of land in a few years.
According to commercial real estate firm CBRE, a confluence of
e-commerce as well as Vancouver being situated between the Pacific
Ocean and mountains is resulting in surging real estate prices and
demand for warehouse space.In fact, industrial rents increased 16%
last year, to a record of $11.86 per square foot.
“There is a critical shortage of industrial land in Vancouver,”
CBRE Canada’s Vice Chairman Paul Morassutti told Bloomberg.“It was
our estimation that they could potentially, literally run out
of industrial land by the early 2020s.”
Meanwhile, in Canada’s largest city the industrial market had a
robust showing in 2018.While rents did not rise as much as
they did in Vancouver, the $7 per square foot increase, supply is
well behind demand.To finish the year, Toronto’s downtown has North
America’s lowest office vacancy rate (2.7%), and rents in the most
popular towers surged a 14%, reaching $35.37 per square foot.To
catch up to demand, a more flurry of new supply is expected,
however, the timing might be precarious as it should align with the
Commercial real estate investment kept inclining, setting a
record in 2018 when it hit $49.3 billion—68% above
British Columbia’s moderating housing market will have a domino
effect of overall weakness in the provincial economy, the
Conference Board of Canada predicted in its study released last
Some ongoing energy megaprojects might help alleviate some of
the pain, according to the analysis.Among the most promising of
these is a $40-billion project based in Kitimat, B.C.by LNG Canada
and five investment partners.
“With the housing market slowing, investor approval of LNG
Canada’s liquefied natural gas terminal and pipeline in late 2018
came at an opportune time for the province.The first phase of the
development will provide a substantial boost to the province’s real
GDP between now and the middle of the next decade,” the Board
stated in its report, as quoted by Business in Vancouver.
Nevertheless, the market should still brace for considerable
real GDP growth slowdown, with housing likely to drag down the
economy well into next year.
cooling policies still needed – B.C.Finance Minister
The Board warned that the province’s economy will shrink from
2.6% in 2018 to 2.5% this year, and then down to 2.4% in 2020.These
would be noticeably lower than the 2014-17 period, which enjoyed an
average of 3.2% growth.
Said slowdown will make itself especially felt in the largest
The growing number of tech companies taking roost in large
offices situated at major cities nationwide will ensure the
commercial market’s resiliency in the event of a recession,
according to CBRE’s Paul Morassutti.
“Tech has become so ubiquitous across Canadian industries [that]
the true impact the tech sector has on Canada’s economy has been
understated,” Morassutti said, as quoted by Real Estate News
This is quite apparent in Toronto, which is considered one of
the global leaders in high-technology innovation, particularly
research in artificial intelligence.
At present, around 10 million square feet of office space is
under construction in in the city, but around 58% of that volume
has already been pre-leased.Tech firms represented fully one-fifth
of these pre-leases, CBRE noted.
Industry movers like Microsoft are now betting on the city’s
long-term prospects, if its move into a 132,000-square-foot lease
at the new CIBC Square in downtown Toronto is any indication.
is a top commercial investment destination right now
“Tech companies anchoring new buildings is something we have
virtually never seen before,” Morassutti stated.
“Over the past 10 years, tech has grown at more than 2.5 times
the pace of the energy sector and three times the overall economy,”
he added.“In real estate,
The cement sector is the second-largest industrial emitter of
carbon dioxide, according to the International Energy Agency, and
given the building boom that’s gripped the country’s largest
cities, it is unlikely Canada will reduce emissions below 2030
However, there could be a solution.
Mass Timber technology is being touted as a solution that will
reduce carbon emissions and save consumers money.According to Erik
Andreasen, vice president of Adera Development, which has been
building exclusively with wood for 50 years in Metro Vancouver,
there are several benefits to constructing buildings with wood
instead of concrete.
“The homes are quieter than concrete and the homes are as solid
as concrete homes, but they have better performance,” he said.“Even
when it comes down to fire, our wood doesn’t burn.We perceive smart
wood to be the building technology of the future and we can compete
with concrete pound for pound, dollar for dollar, and there are a
number of benefits for customers.”
Last year, Adera finished Virtuoso, a condo project at the
University of British Columbia that uses 1,120 cubic metres of
lumber for its cross-laminated timber portion.Every cubic metre
sequesters 220 kilos of carbon, which is the equivalent of 245
tonnes of carbon dioxide.For context, the average automobile
produces 4.5 tonnes of carbon annually.
Condo supply in the country’s largest markets might see
significant increases in the near future, but on the whole, young
professionals and starting families will still prefer
single-detached homes, a Globe and Mail
politics/business columnist has argued.
While well-intentioned, a federal policy focused on boosting the
availability of low-cost condo units in downtown areas “may have
unwittingly encouraged urban sprawl by forcing more Canadians to
look further to the exurbs to realize their dream of a owning a
detached, single-family home with a yard,” Konrad Yakabuski wrote
in his latest column.
“Extending the amortization period on insured mortgages, easing
the stress test introduced last year or increasing the $750 tax
credit for first-time buyers might encourage more millennials to
purchase a condo, the only type of property within financial
reach,” he added.“But since most millennials ultimately aspire to
purchase of a single-family home, it’s worthwhile asking whether
Canada needs any more condos right now.”
‘micro living’ catch on in Toronto?
One should look no further than Greater Montreal to witness
evidence of the phenomenon.Updated numbers provided by the Quebec
statistics agency showed that nearly 24,000 residents – a
significant proportion of which were young households – moved from
Montreal to the suburbs and exurbs in 2018.This was
Of Canada’s largest sectors, it was e-commerce that accounted
for much of the demand for Vancouver’s commercial and industrial
space, according to CBRE Ltd.
Specifically, the market’s warehouse spaces attracted a majority
of the e-commerce firms and ventures taking roost in the city.
Industrial rent rates have consequently grown by 16% annually to
reach a record-high $11.86 per square foot last year – the highest
among Canada’s urban commercial property markets in 2018.
In contrast, Vancouver’s 1.5% industrial vacancy near the end of
2018 was among the lowest in North America.
commercial investment to intensify this year
Tight supply and historically low unemployment rates will foster
sustained demand for much of 2019, according to Avison Young Canada
Inc.in its report released in January.
Nearly 4.9 million square feet of industrial space was under
development across Metro Vancouver as of the end of last year, the
CBRE warned that Vancouver is in danger of running out of
industrial land soon, if these trends hold.
“There is a critical shortage of industrial land in Vancouver,”
CBRE Canada vice chairman Paul Morassutti told
“It was our estimation that they could potentially, literally
run out of industrial land by the
With housing deceleration nationwide becoming especially
apparent in January, observers warned that the strict lending rules
introduced last year might have had a more drastic impact than
“The decline in last month above and beyond what was observed a
year ago is indicative of the fact that the markets are not merely
reacting to new regulations, but the markets have embraced a more
systematic response that is characterized by fewer transactions and
lower prices,” Ryerson University associate professor Murtaza
Haider and real estate industry veteran Stephen Moranis wrote in a
recent analysis for the Financial Post.
January sales activity shrank by 4% annually, following an
already noticeable 2.4% decline during the same month last
“The January 2019 statistics offer the first opportunity to
compare the annual change in housing market dynamics after the
stress test came into effect,” Haider and Moranis stated, adding
that “the housing market slowdown is deeper rooted than a direct
and immediate reaction to policy interventions.”
and Montreal luxury condos surge in value
More importantly, a possible domino effect stemming from the
largest banks’ mortgage operations should not be ignored.
“The weakness in housing markets also affects mortgage lending,
a business The Big Five banks continue to dominate in Canada.The
Amid a marked slowdown in nationwide activity recently, the
Greater Toronto Area has actually experienced a considerable
year-over-year increase in new home sales, according to the
Building Industry and Land Development Association.
Citing data from Altus Group, BILD announced earlier this week
that GTA new home sales volume increased by 14% annually in
January, reaching 1,362 transactions.
A deviation from this trend was the single-family segment, which
saw its sales settle at levels 53% lower than the 10-year average
for this asset class.New condo apartments comprised a notable
portion of last month’s activity, with sales being only 5% lower
than the 10-year average.
Despite the road bumps, BILD president and CEO David Wilkes
deemed the January numbers as a welcome change.
“It looks like the market is starting to return to typical
levels after a particularly difficult year,” Wilkes said.“With the
spring budget coming up, we are calling on the federal government
to take steps to make it easier for first-time home buyers to get
into the housing market.”
Read more:Higher-density housing to dominate West GTA
“The improvement in new home sales over last January is
consistent with our outlook for somewhat higher annual sales in the
GTA this year, following the drop in 2018.” Altus Group
B.C.’s Ministry of Finance has announced the launch of the Condo
and Strata Assignment Integrity Register, the latest thrust in its
efforts to crack down on the speculation that has inflamed the
province’s housing prices to unprecedented heights.
Finance Minister Carol James said that the platform, which is
the first of its kind in Canada, will ensure fairness and
transparency in the industry.
“For too long, speculators and tax evaders have been taking
advantage of loopholes in our real estate market, driving up prices
and shutting British Columbians out of the market,” James said, as
quoted by The Canadian Press.
One of the registry’s goals is a mandate upon condo developers
to collect and report the identity and citizenship of any buyer
assigning their purchase contract of a condo to another party
(frequently at a higher price point) before the project that the
unit is associated with reaches completion.
cooling policies still needed – B.C.Finance Minister
The reports will be filed by developers every quarter, with the
first (covering January 1 - March 31) due April 30.
“The B.C.government will use this information to ensure that
people who assign condos are paying the appropriate income tax,
capital gains and property transfer tax,” the news release
Good news for luxury condominium owners in Toronto and
According to a luxury housing market report from Royal LePage,
the condo markets in Canada’s two largest cities appreciated 10.2%
and 8.4%, respectively, through the 12 months preceding January
31.The average price in Toronto reached $2,268,571, and in Montreal
it rose to $1,295,401.
The market for luxury detached houses in Toronto witnessed
a 40% drop in sales activity and, consequently, average prices
rose a paltry 3.1% to reach $3,575,702.Montreal’s luxury housing
market appreciated 5.4% year-over-year, hitting $1,680,942.
The luxury market in Vancouver, however, has seen better
days.During the aforementioned period, luxury condominium sales in
Greater Vancouver decreased 32.2%, as did prices by 0.6%, for an
average of $2,680,064.Greater Vancouver’s luxury housing market
also dropped 1.7%, but the cost is still Canada’s highest at
$5,751,928.The report read:
“Across Canada’s five largest cities, Greater Vancouver was the
only city to post a decline in median luxury home prices.The number
of luxury houses trading hands declined over the past two years, a
trend that initially began with the introduction of measures to
cool the city’s real estate market in 2016.Luxury home values have
dipped but remain remarkably steady as many Vancouverites refuse to
sell at what they perceive as a discount.Exasperating soft demand,
Chinese nationals, an important luxury buyer
Policies that cultivate further housing slowdown are still
needed to ensure greater affordability in B.C., Finance Minister
Carole James said last week.
The statement came amid official reports of considerable
slowdown in the province’s home price growth and sales activity,
after several changes were introduced last year.
Among the most notable of these regulatory revisions were levies
aimed at speculators and hiking the taxes on foreign buyers, which
is part of the B.C.government’s aim to diversify the economy and
“not simply relying, for example, on a speculative real estate
market which doesn’t help grow a sustainable economy,” James said,
as quoted by Bloomberg.
“I think there’s more to go.I don’t think anyone in the Metro
Vancouver-area would classify housing as affordable at this
Read more:Red tape
is a major influence in Vancouver’s housing scarcity
B.C.is not looking at possible housing risks as a major
long-term threat, considering that it is projecting new borrowings
to grow to $7.5 billion in the coming fiscal year, up from $6.3
billion in the current year.
The province’s fiscal plan, as presented in documents last week,
is estimating economic growth to hit 2.4% this year, outstripping
the 2.2% in 2018.
James noted that contrary to doomsayers’ fears of long-term
lethargy, this trend
High-capacity multi-family housing will soon become the primary
budget choice in the Greater Toronto Area, especially in the
western part of the region.
“Freehold properties remain the choice of most purchasers in
Halton Region and Toronto West,” RE/MAX of Ontario-Atlantic Canada
executive vice president Christopher Alexander said.“The same is
true to a lesser extent in Toronto Central, but condominiums
continue to gain ground.”
“Just over one in three properties sold in the GTA was a
condominium in 2018 and that figure is higher in the core.As prices
climb in both the city and suburbs, the shift toward higher-density
housing will continue, with fewer single-detached developments
coming to pass.”
Indeed, Halton Region – which includes Burlington, Halton Hills,
Milton and Oakville – represented as much as 10.1% of the GTA’s
residential property sales as of the end of 2018, growing by 2.3%
in the 5 years prior.Toronto West also climbed by nearly 1% during
the same period, to a 10.5% share.
offers positive outlook for sales, price growth in 2019
Much of Halton Region’s activity stemmed from popular clamour
for affordable housing, which led to greater and faster
construction in the area.
“Product was coming on-stream at a time when the Greater Toronto
Area (GTA) reported its lowest
Few real estate investors aren’t sweet on student housing, and
for good reason, but which regions in Ontario have the most to
The owner of Strauss Investments says cities with satellite
schools are a good net because of their small but concentrated
“Laurier and Nipissing universities have satellites in
Brantford,” said Strauss, who’s also a sales representative with
Rock Star Real Estate.“In Kitchener, there’s the McMaster
University Waterloo Regional Campus, and it’s its own little pocket
market.Satellite schools offer niches that let smaller investors
get in there.All you have to do is provide good product and you get
lots of action without much competition.”
Waterloo, on the other hand, has a glut of inventory largely
driven by foreign investment, but Strauss noted that the
accommodations are superlative.Nevertheless, the closer the
property is to the University of Waterloo, the fewer problems
investors will have finding tenants.
Strauss warns that some cities have certain stipulations, like
the number of rooms permitted, that can hinder the investment’s
potential.However, he’s bullish on London and Hamilton.
“Purpose-built is obviously better than just taking an old house
and converting it, but in Hamilton the areas near Mohawk College
and McMaster University are very student-friendly.There are a lot
of rental opportunities, and at the brokerage I work at
New data from the Canadian Real Estate Association indicated
that Montreal’s housing market is benefiting from strong growth
across all crucial metrics – and might even have enough of a boost
to outstrip Vancouver’s pace soon.
In January, Montreal’s median home sale price went up by 6.3%
annually, reaching $349,300.While the price was still far below
Vancouver’s $1.02 million average, the latter’s price levels
actually fell by 4.5% during the same period.
Fuelled by a robust economy and immense purchasing power in an
environment of relatively low housing prices, the Montreal market’s
sales volume also enjoyed a 7.1% increase from December 2018, which
was the fastest month-over-month growth in a decade.
In comparison, activity in Canada’s hottest cities during the
same time frame was just around 1.2%, while the overall national
increase was at 3.6%.
wars now more frequent in Montreal
The total dollar value of property transactions (seasonally
adjusted) in Montreal went up by 18% annually, up to $1.63
billion.Meanwhile, Vancouver’s fell by 42%, down to $1.7
While this might be a warning sign to cautious would-be
investors, the overall lower costs of living in the city –
especially when compared to Canada’s most inflamed markets –
considerably reduce the risk of Montreal suffering from
A Ryerson City Building Institute report exploring ways to solve
Toronto’s affordability crisis suggests micro living could catch on
in the city.
The report, called Rethinking the Tower, mused about the
construction of micro units in a city dominated by
condominiums.Micro units have become popular in New York City and
Seattle because rental and sale prices correspond to unit size, and
in a city like Toronto it could go a long way towards solving
“Well-designed rental or ownership micro units offer an
opportunity to deliver more affordable homes to the market,
particularly in central locations where land costs can be a
significant barrier to affordability,” read the report.“Analyses by
the Urban Land Institute (ULI) and Colliers have found that micro
units in American cities lease at monthly rents 20% to 30% lower
than conventional apartments, although they cost more per square
foot in rent than conventional rental units.”
A micro unit is roughly 350 square feet in area and has an
in-unit bathroom and kitchen, but designs is key to its
“Many developments will boast flexible furniture systems, high
ceilings, large windows, built-in storage and/or convertible
furniture,” continued the report.“Some have also bundled micro
units with shared amenities and services such as storage, lounge,
areas and outdoor space.Micro units are often marketed