The impact of Target closures on residential real estate

The announcement last week that Target will close its 133 Canadian stores is a reminder to investors to buy residential property in cities with diversified job markets.

Eddy Boudiwan, head of real estate investments at Real Estate Rangers and Taft Forward Management Joint Venture, manages properties in towns impacted by the Target closures.

“I always advise our investors and partners to only invest in towns that are not ‘a one-trick pony’, where one or two industries employ most of the job force,” he added.

“Our investment portfolio is located in towns where the job industry is diversified. For example, we are invested in Orillia, where the local Target location will be closed. However, there is a new Costco store coming in, while Walmart and other major stores moved in a few years ago.”

Boudiwan is more concerned about the macro level of Canada’s real estate market, as the price of oil continues its decline and job numbers also plummet.

“Canada lost about 10,000 jobs in November and about 4,300 jobs in December,” he said. “I expect more job losses to follow in Q1 of 2015, with a very low GDP growth forecast.

“I am not projecting doom and gloom, but I do see a very flat path for the next few years, which could present buying opportunities in the years to come. Right now, asset valuations are not realistic.”

Boudiwan contrasts the Canadian real estate market with the significant growth taking place in the U.S. For instance, 320,000 jobs were added in November and 250,000 jobs were added in December.

He added: “This is why I am currently focused on growing my portfolio in the U.S., rather than Canada.”

To find out more about investing in the U.S. market, keep an eye out for CREW’s upcoming February/March issue.

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