As we make our way through the first quarter of 2014, now is a good time to take a closer look at the real estate trends predicted to take hold throughout the year.
Canada's commercial real estate market continues to be stable for the third year in a row, attracting positive attention from both domestic and international investors, including local market investors and sovereign wealth funds. Investors are expected to continue to find the Canadian real estate market attractive in 2014, and the country's commercial property market should keep providing investors with stable, positive income and attractive returns, which will help them meet their investment goals. A wide range of investor groups is expected to be active in the commercial property investment market, including private capital, pension funds, institutions and real estate investment trusts (REITs).
In general, Canada's economy is expected to gain momentum this year, spurred in part by an improving U.S. and global economy. Core property values, which have been steadily rising over the past few years, will continue to hover close to the peak level as the result of investment demand and low interest rates.
One dominant trend throughout this year may be urbanization, which will generate opportunities for the redevelopment of urban locations, as well as an increased number of mixed-use projects. An increasing number of retailers are expected to add new locations, contributing to the overall health and growth of the retail market. The commercial real estate sector is also expected to see a healthy occupancy demand, and competition for a limited number of vacancies should ensure that rental rates remain at the peak level, with the potential for increases in central urban areas.
Condominiums and apartments will continue to be a prominent topic of discussion, especially as rising housing prices prompt the nation to provide affordable housing options to an immigrant-dense population. Income performance for all rental markets, both retail and residential, will likely remain positive and continue to post solid occupancy levels, as well as stable or modest rent increases.
Throughout 2014, construction activity is expected to increase in both the office and industrial sectors. As the economy improves, developers hope these properties will be leased quickly, as there has been modest demand for this type of space in both the public and private sectors in recent years. Demand for Canadian products from the United States will also help export-driven organizations in areas dominated by manufacturing, such as Toronto and Montreal.
This year looks to have some positive things in store for commercial and residential real estate. If these predictions are correct, there will be a number of great opportunities for real estate investors across the country.