- Investors continued to exhibit confidence in the multi-suite
residential rental property sector in the second quarter.
- Industrial property sales increased substantially, which drove
overall Canadian investment property transaction volume
significantly higher.
- Canada's office leasing market
witnessed a positive progression, due mostly to the pre-leasing of
new supply.
- Retail leasing activity increased as retailers sought
high-quality physical spaces.
MISSISSAUGA, ON, Sept. 4,
2024 /CNW/ - The Canadian commercial real estate
sector exhibited positive momentum in the second quarter, according
to Morguard's 2024 Economic Outlook and Market Fundamentals Second
Quarter Update ("Morguard") (TSX: MRC). The multi-suite residential
rental property investment remained largely stable due to healthy
fundamentals along with a surge in industrial investment property
transactions in the second quarter.
"Both the commercial real estate and multi-suite residential
rental sector exhibited a measure of resilience in the second
quarter, which built on a solid foundation for growth," said
Angela Sahi, President and Chief
Operating Officer of Morguard. "With easing inflation pressures and
encouraging signs of rate cuts, this positive momentum indicates
that the Canadian real estate market is set to gradually
rebound."
Looking ahead to the rest of 2024, further rate cuts by the Bank
of Canada and a continued easing
of inflationary pressure are anticipated. Investor confidence is
expected to increase as monetary policy becomes less
restrictive.
"Despite a weaker near-term economic growth outlook, real estate
investors will continue to exhibit a measure of confidence in
Canada's commercial real estate
sector as evidenced by the uptick in transaction volume in the
second quarter," said Keith Reading,
Senior Director, Research at Morguard. "This confidence is expected
to persist as the real estate sector gradually recovers from the
effects of the most recent economic slowdown."
Multi-Suite Residential Real Estate
Investors
demonstrated continued confidence in the multi-suite residential
rental property market during the second quarter of 2024, driven by
the sector's strong long-term fundamental and positive near-term
rent growth outlooks. Although borrowing rates remained high in the
second quarter, investor optimism increased with the Bank of
Canada's 25-bps overnight policy
rate cut in June. Looking ahead, the multi-suite residential rental
property market is expected to continue to exhibit stable and
positive performance characteristics.
Commercial Real Estate
Industrial investment property
transaction volume rose in the second quarter of 2024, with sales
of properties valued at $10 million
or more increasing by 48.1% quarter-over-quarter across five major
markets, driving overall Canadian investment volume higher.
However, leasing demand patterns softened as industrial
construction activity ramped up, leading to a rise in the national
availability rate.
Canada's office leasing market
showed positive progress this past quarter, primarily driven by
pre-leased spaces in newly constructed buildings. Notably,
Toronto and Montreal registered positive absorption in the
second quarter through the pre-leasing of newly built spaces. This
trend highlighted the preference exhibited by Canadian businesses
for efficient and high-quality office space with access to an
abundance of attractive amenities.
The retail leasing market continued its recovery, with an
increase in new leasing activities as retailers seek high-quality
physical retail space. However, the second quarter saw a slowdown
in sales in the retail property investment sector, as institutional
buyers remained selective and maintained a cautious approach in
their acquisitions.
Economic Factors
Canada's economy expanded at a modest pace
during the second quarter, continuing the year-to-date trend.
Economic activity tapered off due to the combined effect of high
interest rates, elevated inflation levels, forest fires, and labour
disruptions. Canada's economy will
continue to expand at a modest pace in the second half of 2024.
A moderate level of inflation pressure was reported in the
second quarter. Canada's Consumer
Price Index rested below the 3.0% during the quarter, down
significantly from the 40-year average annual high posted for 2022.
Reduced near-term inflation pressure contributed to the Bank of
Canada's rate cut decision of
June 2024. Economic growth slowed
during the second quarter and Canada's labour market continue to soften,
both of which supported the Bank of Canada's decision to lower its key overnight
rate. More rate cuts are anticipated in the second half of the
year.
Released today by Morguard, the 2024 Canadian Economic Outlook
and Market Fundamentals Second Quarter Update offers a detailed
analysis on the 2024 real estate investment trends to watch in
Canada. The full report is
available at morguard.com/research.
About Morguard Corporation
Morguard Corporation is a
major North American real estate and property management company.
It has extensive retail, office, industrial, and residential
holdings owned directly and through its investment in Morguard Real
Estate Investment Trust and Morguard North American Residential
REIT. Morguard also provides real estate management services to
institutional and other investors. Morguard's owned and managed
portfolio of assets is valued at $17.6
billion.
Please visit www.morguard.com or follow us on
LinkedIn and Instagram.
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SOURCE Morguard Corporation