Emerging Trends in Real Estate 2019 ®

Breaking through: Real estate gets creative as the industry navigates uncertainty

This year’s Canadian real estate trends are about navigating uncertainty. As fast-paced technological and social change transforms how people live and work, the real estate sector faces rising pressure to respond with new ideas by accelerating digital transformation, being more innovative with deal strategy and rethinking how it addresses affordability.

Those that embrace creativity may find themselves in a position to take advantage of the shifting environment and grow with confidence.

“There has been change before. But now the pace of change is too fast to comprehend.”

Accelerating digital transformation in real estate

The future of real estate is poised for a proptech boom. Technology trends like blockchain transactions, machine learning, predictive analytics and virtual reality are helping industry leaders—and emerging real estate start-ups—innovate boldly as they navigate market uncertainty.

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Real estate strategies rely on creativity and innovation

Finding good deals has become a challenge. Real estate players are looking to rebalance portfolios by considering diverse property types, redeveloping assets, exploring strategic partnerships and unlocking insights from predictive analytics.

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Time to rethink the housing affordability puzzle

On the issue of affordability, it’s time to move beyond efforts to limit demand by looking at the supply side of the equation. In the meantime, potential homeowners are reconsidering where and how they live.

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Markets to watch in 2019

While Toronto and Vancouver continue to lead all Canadian cities in terms of real estate investment prospects, every real estate market has its own opportunities and challenges. Explore the 10 markets to watch across Canada.
emerging trends in real estate map of canada

Property type outlook

While there are regional variations in the outlook for different property types, developers, investors and property owners did strike some common notes in their assessments.

Frank Magliocco, National Real Estate Leader

“While the intersection of real estate and technology has been slow until now, we have seen a significant change in interest and focus in the PropTech industry here locally and globally.”

Frank Magliocco,

National Real Estate Leader

Expected best bets for 2019

Where should Canadian developers and investors focus their attention? Our survey and interviews suggest the best bets can be made in the following areas.

Warehousing and fulfillment

Warehousing and fulfillment represent the top development prospects among survey respondents. With increased need for last-mile delivery and e-commerce facilities, logistics and fulfillment continue to be a major opportunity for creating value. As tenants look for increasingly larger spaces, vacancy rates are tightening and rents are rising.

While the GTA is often an area of focus, development is taking place across the country, as seen in the recent announcement of a large warehouse facility in Ottawa that will lead to the creation of about 600 full-time jobs. One interviewee mentioned the concept of industrial hotelling to allow companies to temporarily use warehouse space for seasonal needs, such as the holiday rush.

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Senior lifestyle housing

Among the top development prospects with survey respondents is age-restricted housing, which one interviewee described as “a rising tide that can’t be denied.” With the number of Canadians over age 65 having surpassed those under age 15 for the first time in the 2016 census, several interviewees cited the development opportunities for senior lifestyle housing. While the development boom could lead to oversupply in certain markets, such as the GTA, interviewees across Canada predicted demand would generally be strong.

An important factor in driving demand for facilities that cater to seniors’ needs is the growth in the population aged 85 and older. Canadians in that age group also show a strong tendency toward collective dwellings, with 31% living in this type of housing in 2017. While demand will be strong, interviewees noted the complexities of investing in such a niche area—one person likened it to a “hotel on steroids”—and emphasized the importance of high-quality, mixed-use facilities that meet a range of lifestyles.

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Multi-family market

As the cost of entering the housing market makes home ownership an increasing challenge, Canadians will continue to turn to multi-family options as an affordable alternative. Our survey results reflect that trend, with respondents citing multi-family homes as a top development prospect. Statistics Canada has been reporting brisk activity for building permits for multi-family dwellings. In fact, it reported a record $3.1 billion in multi-family building permits for May 2018. Interviewees cited multi-family rental prospects as being particularly strong.

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Contact us

Frank Magliocco
Partner
Tel: +1 416 228 4228
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Chris Potter
Partner
Tel: +1 416 869 2494
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Miriam Gurza
Managing Director
Tel: +1 416 687 8143
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