Significant shifts are happening in the Canadian commercial real estate market due to strong population growth and housing supply issues. Builders and developers are focusing on multi-family purpose-built rentals to address the housing shortage, with support from incentives like the CMHC’s Apartment Loan Program, as highlighted in Re/Max Canada’s 2024 Commercial Real Estate Report.
Re/Max Canada president, Christopher Alexander, notes, “The need for shelter, combined with the CMHC’s Apartment Loan Program, has created opportunities for builders and developers in today’s high-interest rate environment.” However, residential construction is still falling short of meeting the demand in major markets with Canada’s population exceeding 40 million.
The report emphasizes the growing importance of multi-family and industrial real estate as top-performing asset classes, with high demand for farmland in Saskatchewan.
Trends of note
Key trends include a focus on high-density and mixed-use developments, capital gains tax impacting smaller investors, increasing demand for industrial real estate, and the resilience of retail stores and luxury brands. The hospitality industry is rebounding, and REITs are adjusting their portfolios.
The office sector is facing challenges, while adaptive reuse of buildings is becoming more common to address housing needs. The commercial real estate market in Western Canada remains strong, with optimism for improvements in market conditions in the latter half of the year.
Looking ahead
Alexander predicts ongoing impacts on the market from various factors like economic performance, interest rates, and housing affordability. Confidence levels are expected to rise, driving renewed activity in the market, while supply issues may persist for sought-after segments.
Overall, the Canadian commercial real estate market is expected to see improvement in 2024, driven by residential housing needs and population growth. The ripple effect of growth is already evident, with communities expanding and increasing demand for services and infrastructure.
Despite diverse market dynamics, the outlook for 2024 is positive, with expectations of continued improvement in market conditions and demand.
For a full report, including market overviews, click here.
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