Commercial real estate in Canada’s six major markets is, by
and large, healthy, but Alberta continues reeling from the
aftershocks of the oil sector’s plummet a few years ago, according
to the National Dashboard Report by Colliers.
Robust office space absorption in Vancouver is being largely
driven by the technology, advertising, media and information
industries, accounting for 40%, while education institutions are
expanding throughout the metropolitan area and comprises 12% of the
absorption.Colliers reported the vacancy rate dropped from 6.3% in
Q2 to 6% in Q3.Education tenants, which figure transit access into
location planning, rose from 35,000 square feet in 2016 to 300,000
Q3 of 2017.The National Dashboard Report also noted that
Vancouver’s Broadway Corridor/Mount Pleasant area is flourishing
with over half a million square feet of office space under
construction or pre-leasing.
Vancouver’s industrial demand is in strong demand, and the
third-quarter vacancy rate in Metro Vancouver is 1.8%, down
slightly from Q2’s 1.9%, and remains below the five-year average of
3.1%.Between the third quarters of 2015 to 2017, the vacancy rate
has been under 2.5%, in part, because of restricted new supply.
The Greater Toronto Area’s vacancy rate during Q3 was 5.3%,
while the availability rate was 7.7%, both of which decreased from
the second quarter.The average asking net and gross rates also
decreased from the previous
An Urbanation report predicts a balanced condo market moving
into next year – and with it a moderation of investor activity.
“We’re coming off unsustainable rates of growth,” said Shaun
Hildebrand, Urbanation’s senior vice president.“It’s not healthy
for a market to see these rates of appreciation.If we did, the
ramifications would be more severe than expected, so expect the
market to transition more quickly away from rapid rate of growth
and record level of sales as we move into 2018.
“That will come as there will be less aggressive investor
demand, who have been the largest buyers of new condominiums.”
Hildebrand says that while investors have cashed in on high
condo rents – prices hit $2.98 per square foot during the third
quarter of 2017 – and capital appreciation, there are sobering
risks they won’t be able to ignore going into next year.
“You have to take into consideration that rents have been
growing strongly, but not growing anywhere near as quickly as
prices, so that puts at risk holding costs for investors being
higher than achievable rent levels when the units come into
completion,” said Hildebrand.
The report forecasts a possible injection of supply somewhere in
the neighbourhood of 12,000 units during the fourth quarter, and
that should boost annual sales
The latest census data revealed that condominium units are
fast becoming the residence type of choice among Canadians, with
fully one in five households in the Toronto Census Metropolitan
Area (CMA) residing in condos.
This development is especially pronounced among first-time
millennial buyers, the census results showed.Among members of this
demographic, condos have become a popular ownership choice amid
ever-rising prices, a trend that doesn’t appear to be waning any
“The proportion of households living in condominium units is
likely to rise,” City Planning’s Michael Wright told the Toronto
“The bulk of the city’s potential housing supply includes
condominium units.For the five-year period ending June 30, 51% of
the proposed development projects in the city’s pipeline involve at
least one condominium application, and these projects represent 85%
of the residential units proposed, under construction or recently
built,” he added.
According to Royal LePage CEO Phil Soper, condos stand as solid
evidence of Toronto’s world-class status.
“One third of housing stock we’ve added since 2011 is
condominium.When I was a kid (in 1980) it was 6%.That’s a dramatic
change.Clearly we’re adjusting the product people buy into.It’s
clear we’ve joined other global cities in a changing social norm
where many people don’t expect the white picket fence,” Soper
But condos can only go
Cranes crowd the Montreal skyline these days as a strong
economy and political stability are fuelling a construction frenzy
throughout the downtown core and beyond.
Although tame by Toronto and Vancouver standards, developers in
Canada’s second-largest city are investing billions of dollars in
new condominium and office complexes, along with retrofitting older
“Since 1976, this is one of the greatest times,” Mayor Denis
Coderre told The Canadian Press.The mayor was alluding to the year
when the election of the separatist Parti Quebecois prompted an
exodus of residents and businesses.
“There [are] right now 150 cranes representing $25 billion of
investment in Montreal,” he said at the official launch of the
second phase of the YUL twin tower and townhouse project that is
sponsored by Chinese investors.
Project developer Kheng Ly of Brivia Group Real Estate, who has
partnered with China’s Tianco Group, said relatively low condo
prices and the lack of a foreign buyers tax make Montreal an
attractive place to invest.
Ly, who arrived in Canada 29 years ago, said the downtown
landscape has changed significantly in the past five years.The
recent addition of direct flights between China and Montreal have
attracted Asian investors who comprise 35% to 40% of condo owners
at the project’s first phase, he said.
Housing affordability continues to dominate the conversation
in the Greater Toronto Area’s housing market.A new report released
by the Urban Land Institute in conjunction with PwC, called
Emerging Trends in Real Estate described governmental regulation as
likely to exacerbate the affordability problem.
The laws of supply and demand lie at the heart of surging
housing prices.Not only are single-family detached homes in high
demand and low supply, but the condo market, too, is beginning to
see signs of strain, as priced-out buyers realize they have no
other choice to settle for skyward balconies over backyards.
The foreign buyer tax cooled the Vancouver and Toronto markets,
where prices grew astronomically, but the report makes mention of
suspicious players within the real estate industry, one of whom
believes growth will continue with or without the tax because of
natural growth.The report also noted that prices cooled temporally
before rebounding and pushing condo prices upwards.
Those interviewed by the report parroted the need for government
to stay out of the market, except to address the need for increased
supply.It’s unanimously believed that the approvals process is one
reason supply isn’t keeping up with demand.
Affordability will catalyze a growing trend:co-living.As the
number of single people among the millennial cohort in expensive
markets like, Toronto and Vancouver, continue rising,
A massive residential complex in Hamilton will be opening its
units for sale on November 4, 2017, its developer announced.
The $360-million Television City project, which was the
brainchild of Lamb Development Corp.in partnership with Movengo
Developments, is the first phase of the company’s investment in
Hamilton, with several more projects worth over $1 billion
scheduled further down the line.
Two connected 40-storey and 30-storey towers will house
approximately 618 units.Upon completion, Television City will offer
474,080 sq.ft.for residential units and 11,344 sq.ft.for retail
The complex is designed with a wide variety of luxury amenities,
including an outdoor infinity pool, fitness centre, and skyclub,
along with a co-op tech workspace, a children’s play centre, a
private dog walk, and a pet-washing station.
Units ranging from studios to penthouses start at
$220,000.Move-ins are slated for 2021.
“As a developer, my main interest lies in building
communities.Hamilton is a vibrant, evolving city, made even greater
by its people,” Lamb Development Corp.CEO Brad Lamb said in a news
“From homeowners to councillors to entrepreneurs, we have had
the opportunity to sit down with Hamilton citizens who are excited
to see the city’s potential come to life.We are happy to be a part
of this stage in its history.”
Interested parties can learn more
This week’s census data revealed Canadians’ changing living
habits – and the trickle-down effect that’s affecting the rental
market and its existing stock in Toronto.
Only 50.2% of Millenials own their own homes, compared with 56%
of boomers who owned when they were that age, according to the
Census.However, Phil Soper, president and CEO of Royal LePage
referred CREW to a summer study the organization commissioned on
peak Millenials (aged 25 to 30) that found 87% believed
homeownership was a positive thing and intended to someday own a
home, and in which 69% said they intended to buy a home within five
“If you compare that to Stats Can data, it shows people are
leaving their parents’ homes later, staying in school later, and
essentially growing up at a slower rate than their parents, which
makes perfect sense,” said Soper.“With technology and increasing
lifespans, the old standard of when we got married and left the
house got stretched, so it makes perfect sense to me.”
Housing affordability has also contributed to more
millennial-aged Torontonians renting than their parents did at
their ages.The city is experiencing inventory shortages on the
ownership and rental fronts, and Soper says condo rentals will
likely comprise a large part of the incoming supply.
“I think one of the things
As Canadian cities continue to crack down on online
home-rental platforms, Airbnb maintains it’s open to regulation
provided new rules don’t penalize casual users and recognize not
every host runs a full-fledged business.
“There are still a lot of misperceptions about what home-sharing
is all about,” according to Alex Dagg, Airbnb’s director of
Canadian public policy, who also warned about unintended
consequences from rushed regulations.
“That’s the concern – that you come up with something that you
think makes sense.And without understanding really what your
community is looking like and how they’re using the platform and
how they’re benefiting from it, you can really design something
that isn’t helpful,” Dagg explained, as quoted by The Canadian
Many homeowners or tenants use the platform to rent out a
portion of or their entire home to earn some extra cash.Airbnb’s
critics argue that it has created additional housing problems in
cities with low vacancy rates and high home ownership costs.
The Vancouver and Toronto governments have indicated that they
are weighing the possibility of imposing a number of restrictions
Dagg is in Vancouver to argue the American company’s case in
front of a city council holding public hearings into a proposed
home-sharing bylaw.If approved, it would take effect in April and
require hosts to
A new CENTURY 21 study of the country shed light on real
estate prices as measured by their price per square foot, and
Vancouver unsurprisingly topped the list.However, according to
Brian Rushton, executive vice president of CENTURY 21 Canada,
Vancouver’s east side is a little-known gem investors can take
While the Vancouver East Side is notorious for being one of the
most impoverished, drug-addled areas in the country, it’s mostly
contained within a few short blocks.Further east, however, Rushton
says that enough redevelopment is occurring, and at
investor-friendly prices, to yield healthy ROIs.
“Some of the areas that have done very well from an investor’s
point of view, at least in the Vancouver marketplace, are in the
east side of Vancouver,” said Rushton.“A lot of the older
communities have been revamped and their existing structures lifted
with new foundation, but the character has been left.The
developers, the builders, the renovators have been able to
capitalize on that quite effectively the last five, six years, and
maybe even a bit longer.
“I wouldn’t say it’s the only place, but of the boroughs
directly related to Vancouver, you’re better off east from a square
footage basis.A lot of investors in the Vancouver condo market are
in the presale market.The Investor might buy four or five units on
Greater Vancouver has seen a major drop in commercial sales
over the last year, but not for lack of demand, as the supply is
seriously constrained compared to last year’s available inventory,
according to a report released by REMAX Commercial.
There were 875 sales during Q2 last year, but only 595 this
year. Last year’s $4.62bln fell 37.5% in 2017, as commercial
sales in Q2 only totalled $2.89bln.Land sales also decreased
year-over-year in Q2, from $2.12bln in 2016 to $1.51bln this year –
a 29% drop.
The report noted that local investors are Greater Vancouver’s
greatest market drivers, but that there’s also strong interest
originating from south of the border, as well as Europe and
The GVA is absorbing office space quickly – the vacancy
rate for A-class offices is 6.7% -- and, in Q2, over 700,000 square
feet of industrial space was absorbed, 50,000 more than the same
time last year.Helping pad those numbers was Amazon, which leased
76,000 square feet of office space earlier this
month.Post-secondary institutions are feeling the squeeze for more
infrastructure space, and the 30-storey Bosa Waterfront Centre near
B.C.Place could help, as it will have 355,000 square feet of office
space.West Pender is also slated for development in the near
The REMAX report stated Bank of Canada interest rate hikes
Home inspections are one of the most important facets of
buying and selling homes, but, unfortunately, they’re often
Such has been the case during Toronto’s bidding war frenzy over
the last few years, during which prospective buyers forfeited their
right to a home inspection for fear of their bid being
rejected.Soon noticed an uptick in calls from people who’d foregone
their right to inspection, and got stuck with thousands of dollars
in repairs.She says that’s a mistake that can be easily
According to Alice Soon, marketing manager of national programs
at Pillar to Post, whether you’re an end-user in the market for a
new home, a seller, or an investor, home inspections are integral
to saving money down the road.
Just imagine buying a rental property only to find out the roof
need replacing, warns Soon.
“If you’re buying an investment property, when you have a
certified home inspector they should be giving you a thorough
report of every part of the house, all the major systems,” she
said.“A person buying a property as an investment is different than
a person buying to live, though that’s important too, because it’s
supposed to make you money, not lose money, so you need to know the
condition of the home.If you buy something and you don’t
In the latest edition of its seasonal Metropolitan Outlook,
The Conference Board of Canada stated that as a whole, the Prairies
can look forward to net positives in terms of economic growth and
real estate this year.
“The worst appears to be over for Saskatoon and Regina.Both
cities are benefiting from a modest firming in oil, potash, and
crop prices,” according to Alan Arcand, associate director of the
Board’s Centre for Municipal Studies.“Winnipeg’s economy is also
enjoying robust growth this year.”
Winnipeg and Saskatoon have been forecast to experience economic
growth of 3.6% each this year, while Regina’s real GDP is expected
to increase by 2.9% in 2017.
“Saskatoon’s construction sector will start levelling off this year
after contracting in the last two years.Despite a weak local
commercial real estate market, two major office towers are planned
for the city’s downtown core and residential permit values are
starting to pick up.In all, construction output is set to rise by
nearly 1% this year and a further 1.8% in 2018.”
“The CMA’s construction output is forecast to rise 0.9% in 2017,
following two straight annual contractions.This year’s expansion is
largely fuelled by ongoing work on a $1.9-billion bypass for the
Trans-Canada Highway.On the residential side, a modest housing
starts recovery is forecast this year,
Latest numbers from the Canadian Real Estate Association
revealed that national home sales in September remained lower
compared to levels recorded one year ago, although slight growth
was observed on a month-over-month basis.
Actual (not seasonally adjusted) sales activity nationwide was
at 11% below the levels back in September 2016.Meanwhile,
residential property sales grew by 2.1% from August to September,
and the number of newly listed homes rebounded by 4.9% in the same
“National sales appear to be stabilizing,” CREA president Andrew
However, he quickly added that “While encouraging, it’s too
early to tell if this is the beginning of a longer-term trend.The
national result continues to be influenced heavily by trends in
Toronto and Vancouver but housing market conditions vary widely
across Canada.All real estate is local, and REALTORS® remain your
best source for information about sales and listings where you live
or might like to.”
“Further tightening of federal regulations aimed at cooling
housing markets in Toronto and Vancouver risks creating collateral
damage in markets elsewhere in Canada,” CREA chief economist
Gregory Klump.“It also jeopardizes Canadian economic growth, which
is already showing signs of fading.”
The entirety of CREA’s data release covering September 2017 can
be accessed here.
in Toronto, Vancouver continues
While rent-to-own purchases are becoming more popular, it’s
important to know who you’re dealing with, and to balance the risks
According to Bob Aaron, a real estate lawyer with Aaron
&Aaron, rent-to-owns typically surge in popularity during
market downturns, and they’re also one of the few options
people with bad credit have available to them.However, Aaron also
says that it’s his preference to advise clients against entering
One way in which buyers get short-shrifted is by paying
above-market rental prices than they would for a similar house,
which, if the buyer chooses not to purchase the home, cannot be
“Rent-to-own helps when the seller can’t sell and when buyers
can’t get approved for mortgages, but the way it often works is the
seller gets the lump sum from the buyer/tenant which is used to
underwrite the down payment,” said Aaron.“So if the buyer decides
not to close, or can’t close, or can’t get a mortgage, all that
money they paid up front and along the way is down the drain.”
He also says another problem with rent-to-owns is there aren’t
any industry standard forms.
The buyer/tenant isn’t the only party at risk, though.
“A defaulting owner can stick the landlord-/investor with all
kinds of arrears, mortgage taxes, utilities,
The newest set of mortgage restrictions announced by the
Office of the Superintendent of Financial Institutions (OSFI) will
hit home buyers looking to upgrade to new properties the hardest,
according to BMO financial group chief economist Doug Porter.
OSFI’s latest rules state that even home buyers who don’t
require mortgage insurance because they have a 20% down payment
will have to prove they can make meet their commitment if interest
rates rise above the five-year benchmark rate published by the Bank
of Canada or 2% higher than their contracted mortgage rate,
whichever is higher.
Move-up buyers would be disproportionately impacted because they
would be most likely to have home equity and qualify for an
uninsured mortgage, Porter explained.
The economist noted that last year’s restrictions took 5% to 10%
out of the housing market’s buying power, and that OSFI’s latest
changes will have a comparable effect.
The guidelines, similar to OSFI’s draft release in July, are
scheduled to take effect on January 1, 2018.
“This is potentially more wide ranging and it will dampen the
housing market in 2018, probably more significantly than we saw
(with) the earlier federal measures,” Porter told the Toronto
However, he emphasized that the changes are “another reason to
believe the [Bank of Canada]