- Investors remain confident in the multi-suite residential
rental sector, a sentiment that was supported by attractive yields
and a solid performance outlook.
- Industrial property investment sales activity slowed due in
part to shortage of available properties.
- Office tenants exhibited a preference for limited-term
subleases that were already improved and ready for immediate
occupancy.
- The Canadian economy is expected to gradually strengthen by
next year, supported by the continued interest rate cut cycle.
MISSISSAUGA, ON, Nov. 19,
2024 /CNW/ - Sales of Canadian multi-suite
residential rental properties surged during the third quarter
thanks in part an increase in availability, according
to Morguard's 2024 Economic Outlook and Market Fundamentals
Third Quarter Update ("Morguard") (TSX: MRC).
"The multi-suite residential rental sector remains popular with
a range of investment groups seeking attractive yields and stable
and rising income streams," said Angela
Sahi, President and Chief Operating Officer of Morguard.
"While some buyers are waiting for borrowing costs to decline
further, the continued easing of inflation and future rate cuts
have created a solid foundation for Canada's real estate market to strengthen
starting next year."
Economic output slightly exceeded expectations during the third
quarter. In line with third-quarter trends, the Canadian economy is
expected to expand modestly as the impact of elevated inflation and
interest rates recede.
"The Bank of Canada's rate cuts
will be crucial to the real estate sector's overall resilience,
helping to drive the economic recovery from the effects of monetary
tightening," said Keith Reading,
Senior Director, Research at Morguard. "As the real estate market
regains momentum, investor activity will increase in the second
half of 2025."
Multi-Suite Residential Real Estate
The third quarter
saw a surge in multi-suite rental property sales, marking the
highest quarterly total since the first quarter of 2022. Investment
sales volume of $1.8 billion was
recorded, with one week remaining in the quarter. This jump can be
attributed to an increase in large-scale property and portfolio
availability. Attractive Canada Mortgage and Housing Corporation
financing supported the rise in sales activity.
Rent growth in the multi-suite residential rental market
softened in the third quarter compared to the stronger gains seen
in previous quarters. The average asking rent for all unit-sizes
combined in the country's 35 largest markets increased by a modest
5.4% year-over-year in September, according to Rentals.ca. In the
near term, rent growth is expected to continue to moderate.
Commercial Real Estate
Industrial property investment
sales activity moderated in the third quarter, following a
significant uptick in the previous quarter, with the slowdown
largely due to a shortage of available properties. Meanwhile, new
supply in the industrial leasing market continued to outpace
demand, consistent with the trend observed over the past year.
The Canadian office leasing market shifted into neutral gear in
the third quarter with absorption rates varying significantly
across regions. The Greater Toronto
Area outperformed, recording over 650,000 square feet of
positive net absorption, while the Greater Vancouver Area underperformed with
negative net absorption. Overall, tenants continued to show a
preference for shorter-term subleases that were already improved
and move-in ready.
Economic Factors
The Canadian economy was on track to
expand by approximately 1.5% in the second half of 2024 with a
slightly stronger growth trend projected for the first half of
2025. This slow-growth outlook is primarily attributed to reduced
household spending, higher rental costs, and continued softening in
the job market. However, the economy is projected to gradually
strengthen in the second half of next year as the effects of higher
interest rates subside, leading to improved domestic demand and
consumer spending.
As inflation eased during the third quarter, the central bank is
expected to continue cutting interest rates over the remainder of
2024 and in early 2025 while focusing on supporting the economy and
labour market. As the central bank continues its rate-cutting
cycle, housing market activity is expected to in 2025.
Released today by Morguard, the 2024 Canadian Economic Outlook
and Market Fundamentals Third Quarter Update provides a
comprehensive assessment of the 2024 real estate investment trends
and outlook 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, hotel 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 $18.5
billion. Please visit www.morguard.com or
follow us on
LinkedIn and Instagram.
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SOURCE Morguard Corporation