Red-Hot Summer Predicted for Canadian Commercial Real Estate

As equity markets and global economic projections turn down, investments in Canadian commercial real estate are up, and are likely to continue soaring. There are still vast reservoirs of dollars that are chasing limited supply — and looking for safe havens.

While commercial real estate transactions show strength nationwide, trends in southern Ontario are particularly strong. This is true across a range of cities in the Niagara region, including St. Catharines, Welland and Thorold, where Gorge Holdings Inc. has several ongoing commercial and residential projects. Niagara Falls, Port Colborne, Fort Erie, Grimsby, Lincoln, Niagara-on-the-Lake, Pelham, Wainfleet and West Lincoln have also seen a substantial quickening in project planning.

According to a new report by RE/MAX, the commercial/industrial sector is tight in 11 of the 12 markets that were examined. This was especially true in Hamilton-Burlington-Niagara, London, the GTA, Ottawa, Winnipeg, Calgary, Edmonton and Vancouver. Companies are finding that the search for new commercial space is taking a year or more, rather than just a few weeks.

Much of the demand is being fueled by e-commerce enterprises such as Amazon, which opened a processing facility in the Vancouver area in 2019 and plans another soon in False Creek Flats, the popular industrial and commercial hub in Metro Vancouver that now hosts more than 600 businesses employing over 8,000 workers. Located within a kilometer of both the port area and downtown, False Creek Flats is becoming an essential linchpin of the West Coast economy.

While online businesses have been spurring much of the commercial and industrial real estate market gains, RE/MAX predicts that the next phase of growth will be fueled by workers returning to offices. With COVID cases fading and government lockdown measures lapsing, many businesses are recalling employees to offices and need additional space. Many of these companies downsized during the pandemic, transforming themselves into virtual or quasi-virtual companies, or moving operations into smaller commercial space. In some cases, the company headquarters became a post office box.

Another trend noticed by RE/MAX is that demand for commercial and industrial real estate is radiating out from large to medium-size markets, creating a new wave of urban sprawl.

Retail has been an uninvited guest in many of these real estate market celebrations, but even in this “legacy” sector demand has been rising. Many shopping malls are well past their prime in popularity and appearance, but investors are finding innovative ways to revitalize or repurpose these spaces. RE/MAX says retail deals are up in three-quarters of Canadian markets. Transactions are multiplying in Hamilton-Burlington-Niagara, Toronto, Ottawa, Winnipeg, Regina, Calgary, Saskatoon, Vancouver and Edmonton.