"Construction activity will rise significantly over the next few years in the industrial and office sectors, with developers hoping a stronger economy will see these properties leased quickly," reads the 2014 Real Estate Investment Trends report from property management titan Morguard Corporation. "The ongoing delivery of new supply in the nation's major downtown office nodes could lead to increased vacancy and downward pressure on rents, if demand fails to keep pace over the next few years."
That last bit may the be one dark spot in an otherwise bright forecast for the sector, more specifically, the commercial real estate segment of the market.
Morguard, for example, is expecting property values to hover close to their peak.
The much-discussed multi-family residential sector will also see relative stability this year as rental buildings remain largely full, wagers Morguard.
The comprehensive list of trends follows:
2014 Real Estate Investment Trends to Watch in Canada
- Solid fundamentals will continue to characterize Canada's real estate market, buoyed by what is anticipated to be a period of moderately stronger economic expansion.
- Property values will continue to range close to the peak, supported by robust investment demand and low interest rates.
- Income performance will remain positive over the near term as rental markets in all sectors post solid occupancy levels, positive demand trends, and stable or modest increases on 2013 rental rate averages.
- Capital flows into Canada's property investment sector will remain robust over the near term, boosted by the eventual return of capital market buyers (i.e. REITs and Real Estate Operating Companies).
- Construction activity will rise significantly over the next few years in the industrial and office sectors, with developers hoping a stronger economy will see these properties leased quickly. The ongoing delivery of new supply in the nation's major downtown office nodes could lead to increased vacancy and downward pressure on rents, if demand fails to keep pace over the next few years.
- The arrival of U.S. retailer Target will continue to impact the retail sector, as the discounting sector adjusts to new competition.
- The broader retail sector will continue to adjust to changing shopping channels, formats and consumer preferences.
- The multi-family residential real estate sector will continue to stabilize, as rental buildings remain largely full. However, competition from the rental condominium market will be monitored closely by landlords in the purpose-built market segment.
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