Research Reports

An increased pace of Canadian commercial investment property sales and record-high levels in the multi-suite residential sector defined the second quarter of 2019, according to Morguard’s Q2 Canadian Economic Outlook and Market Fundamentals Report. The multi-suite residential rental sector was again the strongest contributor to the increase in transaction activity, with investment groups looked to increase their exposure in sectors that had performed relatively well during times of economic weakness. The Bank of Canada’s decision to maintain the overnight rate in July helped to maintain investor activity and appetite for real estate across property asset classes.

Healthy demand is expected to keep availability near record lows across much of Canada’s commercial real estate market, according to Morguard’s first quarter Economic Outlook and Market Fundamentals report. The performance of the multi-suite residential, industrial and office sectors have kept them as favourites of investors as uncertainty in global economic dynamics seems to have had little impact on the Canadian commercial real estate business. While an uptick in new construction is welcome news for tenants searching for available office space, it will be some time before there is significant relief.

Morguard’s fourth quarter Economic Outlook and Market Fundamentals Research report finds that Canadian commercial real estate investor sentiment remained positive through the end of 2018. Investment demand was stable, with most major asset classes commanding strong interest. The office and industrial markets finished the year strongly, with low vacancy rates and robust demand for assets contributing to the health of both sectors. Multi-suite residential rental market fundamentals are expected to soften slightly in 2019 but remain generally healthy, while retail headwinds persist. On the economic front, growth continued on a more modest growth track, with a bearish equity market performance and falling gasoline prices taking the wind out of inflation sales.

Morguard’s third quarter Economic Outlook and Market Fundamentals Research report finds that the rush for industrial real estate continues as investment pace reaches a record-high. Sales volume for the industrial real estate market already stands at a record-high dating back 20 years with half a year still to go. With quality space at a premium and a solid fundamental outlook for the sector, this strong activity is expected to continue to finish the year. The recently announce USMCA trade agreement has eased some of the uncertainty for investors, while Canada’s economy is expected to grow a fairly solid rate in the near-term, a good sign for Canadian commercial real estate. Overall, quarter-over-quarter transaction volume increased across all commercial real estate asset classes, reflecting investor confidence in the market.

The overall pace of Canadian commercial real estate transactions has slowed, but the dip in volume is very much a function of low product availability rather than a drop in demand, according to Morguard’s second quarter Economic Outlook and Market Fundamentals Research report. Multi-suite residential properties bucked the trend, with transaction volumes growing by 17.5% over last year. A shortfall of functional space has also been characteristic of the strong leasing activity in the office and industrial sectors, with cycle-low vacancy rates occurring in most regions. On the economic front, the Bank of Canada’s July interest rate increase was widely anticipated by investors and indicates the Bank expects economic activity to pick up through the balance of the year.

Morguard’s first quarter Economic Outlook and Market Fundamentals Research report finds that Canadian commercial real estate activity was off to a strong start in 2018 as demand continues to outstrip supply. The appetite for commercial real estate investment remains at peak highs, with the flow of capital only being limited by the supply of assets available. Unbalanced demand was noted across all asset classes, with office again leading the way. Despite heightened risk due to increased vacancies, retail property values also remained fairly stable. Lingering uncertainty over NAFTA negotiations led to a global slowdown in economic activity in Q1, strengthening the belief that the Bank of Canada would continue to take a cautious approach to future interest rate hikes.

In the 2018 Canadian Economic Outlook & Market Fundamentals report, Morguard predicts another year of robust commercial real estate investment activity in Canada, with healthy demand for quality assets across the country. Investors remain enthusiastic about the Canadian commercial real estate market after a record volume of transactions in 2017. There is a high supply of capital ready to be invested, and Canadian commercial real estate is a proven performer. Morguard is predicting another very busy and competitive market environment for commercial real estate across the country in the coming year. Morguard's report covers commercial, industrial, multi-suite residential and retail markets. It is published yearly, with quarterly updates to the report. Morguard develops these reports based on experience in property management, Canadian REIT's as well as property investment.