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.
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.
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.