As you make some important decisions about where to invest your money and effectively grow your wealth, start exploring the latest in Canadian commercial real estate trends. With the evolution of various types of properties, from retail to warehouse, you may find the ideal fit for gaining a consistent profit. Keep reading to find out more insights for investors and brokers who are looking toward commercial real estate.
Market Resilience
Because of the constant evolution of commercial real estate, the market proves to be a resilient one. Demand is still high, particularly for warehouses and fulfillment sites. With the rise of e-commerce, there’s more competition among prospective tenants and/or buyers who are looking for commercial property. In fact, with so few available properties, individuals are weighing the pros and cons of buying property versus leasing, depending on interest rates. Moreover, there’s also a healthy demand for vertical spaces and multi-level buildings. Even if the economy experiences some turbulence, this upward trend doesn’t seem to be slowing down any time soon.
Urbanization & Mixed-Use Developments
Returning to the office might present some challenges, but having the opportunity to live “just next door” to your workplace would make the transition go more smoothly. With this idea in mind, you can expect an uptick in mixed-use developments as part of the latest trend in urbanization. The metropolitan areas are not the only locations that will experience the rise of mixed-use facilities. Suburbs and smaller communities may have a higher demand for this type of real estate since it would cut down on the commute while offering a workplace, services, and amenities within walking or a short driving distance.
Tech Hubs & Innovation
Along with increased urbanization, tech hubs and companies that are spearheading innovation will crop up in more of the big cities and their surrounding areas. From medical research facilities to factories that create electric vehicles, commercial and industrial sites will need to be constructed, or existing campuses will need to be refurbished to meet the demands of company owners. Moreover, you can expect more businesses that specialize in providing the infrastructure and services to high-tech entities to come in. Think in terms of wireless services providers, utility providers, and retailers specializing in electronic devices. All of these businesses will need a brick-and-mortar home. So, breaking into this area of commercial real estate could prove to be lucrative.
E-commerce Impact on Industrial Real Estate
Likewise, the pandemic, as mentioned, brought about unforeseen changes in how we conduct business in general. With more purchases made online and the increase in fulfillment and delivery services, customers discovered the convenience of having their items placed on their doorstep. Even with the return to in-person shopping and the rising cost of shipping, this e-commerce uptick has not waned in the least. Thus, you can expect more demand for properties that can hold a warehouse with loading bays and climate-controlled storage for merchandise, sizable parking for commercial vehicles, and office space for dispatch personnel. While some roles loosely related to this industry might still be remote (i.e.: UX designers, copywriters, web developers), don’t be surprised if you also find that prospective investors are looking for office space that works out well for hybrid, high-tech situations.
Sustainability & Green Buildings
In addition to multiple purposes, investors and business owners will also keep sustainable real estate in mind as they make their selections. Consequently, new construction may incorporate more recycled materials and may be used for multiple purposes so as to decrease the carbon footprint. The goal behind the design of new construction or existing structures also entails maximizing the positive effect on personnel and clients while minimizing the impact on the environment. This includes more efficient means of using energy by relying more on natural and renewable resources such as solar power and natural light.
Investment Strategies
As you begin to explore prospects, you can apply different investment strategies to achieve the best return. For instance, core plus investments involve buying quality property, adding features that would increase its value, and holding onto it as a stable revenue source. This tactic carries a low risk. On the other end of the risk (and possible return) spectrum, you can opt for the value-add strategy where you take an existing construction and refurbish it to where it fits into a new asset category. Thus, the advantage to applying this tactic is that you can sell the property (after about five years of appreciation) for more than what you purchased it for. Finally, you have the opportunistic route where you would buy a dilapidated building or one that has few tenants. The property would be extensively renovated with the goal of bringing in more tenants. For this reason, this approach is considered to be high-risk since you might not see returns for years after purchasing the property.
All in all, you have a broad spectrum of factors driving Canadian real estate trends right now, but this translates into more choices for investing. Whether you choose a core plus investment or take a leap of faith in a big renovation, you might find the perfect choice that gives you the best return.