Western Canadian commercial markets slated for strong 2021

Western Canada’s commercial real estate markets are forecasted to perform very well through the remainder of the year, according to separate reports from RE/MAX and CBRE.

According to RE/MAX, institutional investors and private equity were present in nearly every market last year and spurred demand for multi-residential, industrial and office units. Smaller investors showed strong interest in industrial, which was the strongest commercial asset class from Vancouver to Winnipeg, and retail, albeit to a lesser extent.

The report also noted that institutional investors comprised 48% of sales volumes in Calgary, and that 24% came from private equity in the office sector.

“Rebounding global demand for primary energy should help bolster economic performance, as well as demand for commercial real estate, in Alberta in the second half of 2021,” Elton Ash, regional executive vice president at RE/MAX of Western Canada, said in the report. “In the interim, we could see out-of-province institutional investors walk away with some of the city’s most coveted assets.”

Vancouver, the country’s third-largest city and the largest in Western Canada, saw its then-healthy industrial market really catch fire last year and there’s nary a sign of deceleration, according to CBRE’s report. As has been the case for a while now, e-commerce is the main driver, but it’s expanded to include demand from third-party logistics operators that are forecasted to absorb substantial square footage in a bid to maintain pace with marketplace dynamics. Additionally, Vancouver, a hotspot for the film industry, is galvanizing landlords and occupiers to consider purpose-built studio development.

The office sector in Vancouver is beginning to heed whispers for larger employee footprints—that is, more square footage per employee—as a function of robust economic fundamentals in the city.

“In terms of commercial real estate, the B.C. economy is projected to lead the pace for GDP growth,” Jason Kiselbach, vice president and marketing director for CBRE Canada, told CREW. “Commercial real estate fundamentals are tied to economic growth, GDP and jobs, and those indicators are positive.”

Vancouver is building upon trends that were established in 2020, and in addition to torrid demand for industrial space, the multi-family residential sector is also hot, Kiselbach added. The retail and office sectors, which have lagged the aforementioned segments, are beginning to show signs of ascension.

“We’ve seen large multi-family trades this year, which we think will continue happening,” he said. “We’re starting to see demand for retail and office space from tenants and we’re hoping that by mid-2021 we’ll see a pickup of activity in both sectors.”

Retail, says Kiselbach, is showing the encouraging signs of life in suburban Vancouver, where, because working from home is essentially ubiquitous, residents want sleek amenity access.

“Flexibility to work from home bodes well for some of the suburban retail centres.”