The Demand for Commercial Properties in Canada in 2023
The Demand for Commercial Properties in Canada in 2023
Stock market prices often come into play because high stock prices can lead to interest rates rising, which can affect your mortgage rate. Continue reading!
Being a property owner is beneficial because it is a valuable investment. However, a prospective property owner must first secure the funds necessary to buy a house, which is generally impossible if paid out of pocket. For this reason, securing a mortgage is done first, which is a loan used to finance the purchase.
Different countries have different policies regarding mortgages. In Canada, prospective property owners must pay 20% upfront. However, you can still get a mortgage even if you cannot afford to pay 20%. It is possible to secure a loan with a smaller down payment, such as 5% or 10%. Of course, real estate markets are volatile in every country, and Canada is no exception, even if it is one of the most stable countries in the world. Not to mention, stock market prices often come into play because high stock prices can lead to interest rates rising, which can affect your mortgage rate.
Recent Movements in the Canadian Real Estate Market
The RE/MAX Canada 2023 Commercial Real Estate Report revealed that in the first quarter of 2023, the demand for industrial, multi-unit residential, and farmland was extremely high, with values reaching all-time highs. Additionally, retail and office spaces began to show signs of improvement in various markets. The report examined 12 major Canadian centres from Metro Vancouver to St. John's, and the highlights are as follows:
11 out of 12 markets examined during the survey indicated that the demand for industrial goods was very high in the initial months of 2023, with Newfoundland-Labrador being the only exception.
11 out of 12 markets showed that the country's demand for office spaces remains relatively stable. However, Metro Vancouver is not following that trend and is seeing an increased demand for office spaces.
Retail businesses are beginning to reopen and recover in 9 out of 12 markets, focusing on the best locations in small communities. This trend has been seen in cities such as Edmonton, Calgary, Vancouver, Winnipeg, Toronto, Saskatoon, Ottawa, Regina, and Hamilton-Burlington-Niagara.
Suburban office buildings in 8 out of 12 markets surveyed have proven to be resistant in the face of economic hardship. These markets include cities in Canada such as Vancouver, Calgary, Saskatoon, Winnipeg, Hamilton-Burlington-Niagara, Ottawa, Halifax-Dartmouth and Newfoundland-Labrador.
8 out of 12 markets showed a high demand for land for industrial or residential purposes. This included major cities such as Vancouver, Calgary, Regina, Saskatoon, Winnipeg, Ottawa, the Greater Toronto Area, and Halifax-Dartmouth.
8 out of 12 markets had difficulty in renting industrial areas. These markets included Vancouver, Edmonton, Calgary, Winnipeg, Ottawa, the Greater Toronto Area, Hamilton-Burlington-Niagara and London. Realtors advised that tenants searching for new spaces begin their search at least 18 months before their current leasing agreement expires.
People like Vancouver, the Greater Toronto Area, and Regina have difficulty growing their businesses because of a lack of land, particularly in Vancouver, Regina, and the Greater Toronto Area.
The Next Step for the Canadian Real Estate Market in 2023
The COVID-19 pandemic has significantly impacted the commercial real estate industry in Canada. The decline in retail and office space demand, along with the decrease in employment, has caused a decline in commercial property ownership. However, this is not the case anymore because commercial property ownership has rebounded in the last few months. This rebound has been driven by the increased demand for industrial and logistics space, as well as several factors such as low interest rates, government incentives, and the reopening of the economy.
However, this does not mean commercial property ownership is back to pre-pandemic levels. Commercial property owners need help with reduced tenant demand, vacancy rates, and higher debt servicing costs. This is especially true in markets most impacted by the pandemic, such as the retail and hospitality sectors.
Should You Invest in a Commercial Property in Canada?
The answer to this question depends on your circumstances and goals. If you have the capital to invest in a commercial property, you should evaluate the potential risks and rewards and make an informed decision. Some factors to consider include the local market conditions and trends, the current and projected occupancy rates, and the potential for rental income.
THE BOTTOM LINE
Soon enough, Canada's commercial real estate market will likely continue to rebound. As the economy recovers, there is expected to be increased demand for office and retail space, and government incentives, low interest rates, and new technology will likely play a role in the growth of Canada's commercial real estate market in 2023. If you plan to invest, you must conduct thorough research and assess the risks and rewards before making any decisions.
Level Up Mortgages provides top-quality services for mortgage financing in Canada. Securing a mortgage is complex, so we provide solutions to expedite the process. Call us today at 604-809-3188 and allow us to help you!
See What You Qualify For Or Contact Paul To Get Your Pre-Approval.
Paul Davidescu (www.levelupmortgages.com)
Level Up Mortgages
604-809-3188
paul(at)levelupmortgages.com
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