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Investor Confidence to Drive Robust Investment Sales Activity in Canada's Commercial Real Estate Sector in 2019: Morguard

Morguard 11/22/2018

Real Estate Investment Trends to Watch in Canada in 2019

Today, Morguard Corporation ("Morguard") (TSX: MRC) released its 2019 Canadian Economic Outlook and Market Fundamentals Report. The report, Morguard's 21st annual edition, states that activity levels and consumer appetite for quality Canadian real estate assets steadily increased in 2018, with strong indications for a positive outlook for 2019.

The full report, with regional insights and video, is available on Morguard's website at morguard.com/research.

"Canadian commercial real estate has proven to be an attractive asset class for various investment groups recently, a trend that will continue into 2019," said Keith Reading, Director of Research, Morguard. "Over the past 18 months, investors placed capital into the market with confidence, resulting in record-high sales volume. The market shows no signs of slowing, as investors continue to show interest in core and core-plus quality properties with strong tenant profiles in Canada's major urban centres – while site intensification and repositioning opportunities continue to shape the Canadian real estate landscape."

The multi-suite residential asset class posted a record-high flow of capital in 2018, a trend that is expected to carry over into 2019. The national vacancy rate is expected to hold at or near the cycle low, resulting in modest upward pressure on monthly rent averages. Demographic shifts, housing conditions and migration patterns will continue to boost rental demand, while low levels of new construction activity will provide little relief from the shortage of vacant units available for prospective renters. Healthy fundamentals will make the multi-suite residential asset class very attractive for investors in 2019.

For the office asset class, the mature phase of the cycle was extended, resulting in a record high pace of investment during much of 2018. Industrial property investment trends were also generally bullish, as the asset class placed first in terms of market performance during 2018. Morguard's 2019 outlook for the office and industrial asset classes is positive, with demand outstripping supply in most of Canada's urban centres.

Retail investment property sales also hit a record-high in 2018, despite heightened risk in the broader industry and fairly mixed leasing performance. While retail sales growth continues to moderate, properties with development or repositioning potential are expected to generate strong interest among the investment community looking ahead to 2019.

Canada's economy is forecast to expand at a fairly solid rate, which will translate into continued labour market progression and increased consumer spending. Sustained economic expansion over the next few years bodes well for the Canadian commercial real estate sector as a service provider to the economy. Canadian commercial property sales activity will remain robust over the near term, against a backdrop of positive overall sector performance.

The 2019 Economic Outlook and Market Fundamentals Report is a detailed analysis of the 2019 real estate investment trends to watch in Canada. The full report, including regional analysis, is available at morguard.com/research.

About Morguard Corporation
Morguard Corporation is a major North American real estate company. It has extensive retail, office, industrial, multi–suite residential, and hotel holdings owned directly, or through its investment in Morguard North American Residential REIT (TSX: MRG.UN), Morguard REIT (TSX: MRT.UN), and Temple Hotels Inc. (TSX:TPH). Morguard also provides real estate management services to institutional and other investors. Morguard's owned and managed portfolio of assets is valued at $21.6 billion. Please visit morguard.com or follow us on LinkedIn.

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Statements contained herein that are not based on historical or current fact, including without limitation statements containing the words "anticipates," "believes," "may," "continue," "estimate," "expects" and "will" and words of similar expression, constitute "forward-looking statements." Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and regionally; changes in business strategy; financing risk; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; liability and other claims asserted; and other factors. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Publisher does not assume the obligation to update or revise any forward-looking statements.

Morguard Corporation; Real Estate Investment