Canadian Commercial Real Estate Research

Part
01
of five
Part
01

Canadian Commercial Real Estate: Leasing

A total of 33.25 million sq. ft. is occupied in the Canadian commercial real estate market in 2019.

Total Leased Square Footage

  • In a market outlook report published by CBRE Limited in Canada, CBRE provided a breakdown of the net absorption in the commercial real estate in Canada. A summary of the values by segment is as follows:
  • There are 407,647 rooms in the hotel segment of the Canadian commercial real estate market in 2019.

Average Price Per Square Footage

  • The net asking price for rent in the industrial segment of the Canadian commercial real estate market is $8.11 per sq. ft.
  • The net asking price for rent in the office segment of the Canadian commercial real estate market is $20.03 per sq. ft.
  • The net asking price for rent in the multi-family segment of the Canadian commercial real estate market is $1,274 for a 2-bedroom apartment.
  • The average daily rate in the hotel segment of the Canadian commercial real estate market is $166 per room.
  • The average mall sales productivity in the retail segment of the Canadian commercial real estate market is $806 per sq. ft.

Research Strategy

To provide the total square footage of commercial real estate that is leased in Canada and what is the average price per square foot for leasing a commercial real estate, our first approach was to search through market outlook publication by organizations in the commercial real estate market such as CREA and REALTOR. We hoped to find annual reports on the analysis of the market. Although we found annual reports published by CREA, the report does not publish such data.

Next, we searched through statistical databases of the Canadian government. We hoped to identify a section on the website of the Canadian government that aggregates data from the real estate sector of the country. However, there is no designated section for the real estate industry on the website.

We switched gears to through industry reports, and media publications, and expert analyses. We found data on the average rent rates per square foot broken down by segment. This approach also found data on net absorption and the total occupied square footage in different segments of the market. However, there is no separation between what portion is on lease and what portion was outright sale-out.

Furthermore, we attempted to triangulate the total square footage of commercial real estate that is leased. While we have the average rent per square footage, we searched for the total revenue generated from the rents or lease of properties in the market. However, we could not continue with this approach because the available data was on the total investment in the industry which would include rents and constructions. As such, we have provided data on the net absorption in the Canadian market.
Part
02
of five
Part
02

Canadian Commercial Real Estate: Market Size

The size of the Canadian commercial real estate market is about $43,605 million in 2019.

Canadian Commercial Real Estate Market Outlook

  • The Canadian commercial real estate market comprises office, industry, retail, multi-family housing, hotels, and industrial, commercial, investment (ICI) land.
  • CBRE Research reports that total investments in the Canadian commercial real estate market dropped from $49,284 million in 2018 to $43,605 million in 2019.
  • However, the market has grown by 68.3% from the past 10 years.
  • Furthermore, CBRE reports that in the second quarter of 2018, the investment volume in the industry was about $16.5 billion.
  • The primary destinations for commercial real estate investments are Toronto and Vancouver.
  • Calgary, Montreal, and Edmonton round up the top five destinations for commercial real estate investment in Canada based on their share of the market.
Part
03
of five
Part
03

Number of Canadian Commercial Real Estate Brokers

The Canadian commercial real estate market has over 500 brokerage companies and 4,414 registered realtors.

Market Outlook

  • The Canadian Real Estate Association (CREA) opines that its membership includes over 130,000 real estate brokers, agents, and salespeople.
  • Using the filter function on the website of REALTOR, an annex of CREA, to search for realtors with specialties in office, hospitality, retail, multi-family, industrial, and development land, 4,414 realtors were found.
  • Hoovers, a company listing database, listed 503 commercial real estate brokerage & management companies that are located in Canada.
  • Furthermore, Clutch, another company listing database, identified 578 commercial real estate brokers in Canada.

Research Strategy

To provide the total number of commercial real estate brokers in Canada, our first approach was to search through the website of the Canadian government. We hoped to find a section on the Canadian government website that provides a list of licensed brokers in the country. However, there is no designated section on the website that provides a list of brokers. Next, we searched through the website of the Canadian real estate association. While we identified CREA as the unifying association for this industry, the website did not provide a breakdown of data on the number of its membership. Furthermore, we searched through industry reports, media publications, expert article, and third-party company listing databases for an insight into the total number of brokers in the Canadian commercial real estate market. We found a list of commercial real estate companies listed by third-party company listing sources. However, it is likely that a company would have more than 1 broker and more than one branch in the country. As such, we have provided this data, as well as the total number of individual brokers provided by CREA.



Part
04
of five
Part
04

Canadian Commercial Real Estate Market: Threats and Risks

Unfortunately, we were unable to find any predictions in the Canadian commercial real estate market that was from one to three years in the future. It was found that the industrial and office real estate sectors will be in demand in 2020. There were a few other helpful insights located during the research. More information can be found below.

CANADIAN COMMERCIAL REAL ESTATE MARKET THREATS

  • Within the next six years, over 60% of all construction activity in Canada is forecast to take place in emerging markets.
  • In 2018 some disruptors in real estate were shared workspaces, online retail influence, industrial real estate demand, and emerging digital tools.
  • In 2020, it's predicted that industrial and office real estate will be healthy and in demand.
  • Deloitte also mentions coworking spaces and the need for smart commercial buildings in the market.
  • Canada’s historical investment is estimated to be CAD 20 billion in office buildings and CAD 22 billion in the retail sectors.

RESEARCH STRATEGY

Your research team began by looking for any market predictions available by companies like Deloitte Canada or PWC. During the search, there were predictions done for the year 2020 but that falls outside the one to a three-year window. There were also a few projections/predictions that were for 2018 or older but they wouldn’t have had any usefulness. The decision was made to just move to the next strategy.

In the next strategy, they looked for any predictions posted by thought leaders or high ranking commercial real estate brokers/agents. Publications like the Financial Post and Newswire Canada spoke of thought leaders in various industries that unfortunately did not include commercial real estate. After a careful search, there were no mentions of commercial real estate in Canada. Since this strategy didn’t answer the question, the final strategy was implemented.

In the final strategy, they tried to locate any commercial real estate organizations or associations that predict market changes and expectations. Some websites that were researched were the Canadian Real estate Association and Realpac. There were white papers and articles available on the real estate industry (including commercial) but there were no predictions between one and three years out.
Part
05
of five
Part
05

Breakdown of the Canadian Commercial Real Estate Market by Vertical

The Canadian commercial real estate industry is segmented into office, industry, retail, multi-family housing, hotels, and industrial, commercial, investment (ICI) land.

Office

  • This segment includes available apartments for rentals for business purposes.
  • In 2019, the total investment volume in the office segment of the Canadian commercial real estate market is $10,494 million.

Industry

  • This segment includes properties used for the manufacture, distribution, or storing of products.
  • The investment volume in the industry segment of the Canadian commercial real estate market is $10,193 million in 2019.

Retail

  • This segment includes indoor and outdoor shopping malls, restaurants, groceries, and big-box retailers.
  • The investment volume in the retail segment of the Canadian commercial real estate market is $7,640 million in 2019.

Multi-Family Housing

  • This segment consists of apartment buildings that are provided for-profit purposes.
  • In 2019, the total investment volume in the multi-family housing segment of the Canadian commercial real estate market is $7,282 million.

Hotels

  • This segment consists of motels, luxury resorts, and business hotels, excluding home rentals such as Airbnb.
  • In 2019, the total investment volume in the hotel segment of the Canadian commercial real estate market is $1,200 million.

ICI Land

  • This segment consists of vacant lands that could be leased for industrial, commercial, or investment purposes.
  • The investment volume in the ICI land segment of the Canadian commercial real estate market is $6,796 million in 2019.
Sources
Sources