Canadian Commercial Real Estate to Remain Strong


Residential real estate has been in flux recently, but there is one real estate market that has remained stable- commercial properties. Canada’s commercial real estate boom is expected to carry over into 2019 according to a report by Avison Young.


Canadian commercial real estate is strengthened by tight supply and the lowest unemployment rate in four decades. Bill Argeropoulos, a Canadian research leader for Avison Young stated, “Strong performances in 2017 and 2018 have led to supply constraints amid a maturing commercial real estate cycle in Canada. Activity is expected to remain stable in 2019 with a general supply constraint being the primary brake on property market growth. Meanwhile, occupiers and owners will have to adjust to rapid technological advances during a period of moderating economic growth.”


Tight supply is a driving force behind Canada’s commercial real estate market. Vacancy rates in downtown markets are particularly low, with Toronto currently only at a 2.4 per cent vacancy rate. Office vacancy declined nationwide too, lowering the Canadian average to 11 per cent. Vacancy is expected to remain similar throughout 2019, although it will rise modestly to 11.3 per cent as new units currently being constructed hit the market.


The country’s industrial real estate is also experiencing lower vacancy rates. They fell to a new record low of 3.9 per cent near the end of 2018, with rates expected to lower even more in 2019. Toronto and Vancouver had the lowest industrial vacancy rates in all of North America, at 1.3 per cent and 1.5 per cent respectively.


Canada’s retail real estate market is remaining strong too, despite the closure of big chains and the rise of online shopping. Luxury and discount retailers are thriving, and more international retailers are entering Canada. It was also recently announced that Toronto’s Yorkdale mall was the most profitable, even compared to the US.


Avison Young’s CEO Mark Rose said, “We continue to feel very positive about opportunities in the real estate environment for the year ahead.” A strong commercial real estate market hints at good things all around for Canada’s economy.