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Data analytics, a powerful tool for succeeding in an uncertain Toronto real estate market

If you want to get a handle on the outlook for the Toronto real estate market at a time of significant uncertainty, you need to look carefully at a rapidly changing world of work.

That was one of the key themes at our recent virtual event, held in partnership with the Urban Land Institute, to explore the findings of our 2021 Emerging Trends in Real Estate report and the implications for the Greater Toronto Area market. An accelerated shift to remote working has significant ramifications across real estate asset classes, speakers told participants at the October 30 event.

Illustration of large magnifying glass over cityscape
Illustration of woman standing in front of oversized laptop

The impact of remote working on where we live

While there was plenty of debate at the event about the future of the office and the return to the workplace, findings from our recent Canadian workforce of the future survey suggested there will be a significant role for a hybrid model of remote and office-based work. One of the biggest impacts of this on the real estate market is on where people live.

Although our report left open the question of whether suburbanization is likely to be a long-term trend, there are signs of accelerated activity in GTA suburban housing markets so far this year as the pandemic leads some people to seek more space and remote working expands their options around where they live. In its most recent report for November 2020, the Greater Toronto Regional Real Estate Board found notably higher year-over-year increases in the average sale price for homes in the 905 region than in the City of Toronto.

A changing landscape for retail and industrial real estate

We’re also seeing significant change across other asset classes. With fewer people going into the office, for example, retail properties in key business districts, like Toronto’s underground PATH system, are struggling for the moment.

These changes are having knock-on effects on industrial real estate. As our recent Consumer insights survey found, there’s a strong link between working from home and digital shopping behaviours. With e-commerce growth accelerating, we’re seeing a rising focus on last-mile delivery solutions to get items into customers’ hands as quickly as possible, which is creating a need for warehousing facilities outside traditional industrial areas.

Illustration of two men, holding tablets, standing in front of industrial machinery

* 2021 - 2023 Forecast as of October 30, 2020
** 2020 Forecast as of March 12, 2020, although multiple organizations, including Statistics Canada, have noted an ongoing slowdown in arrivals since the COVID-19 pandemic
Sources: Statistics Canada, annual reports to Parliament on immigration, 2021-23 immigration levels plan

Opportunities in the downtown Toronto real estate market

Before we explore some of the ways GTA real estate players can navigate these changes, it’s important to point out that there are still plenty of opportunities in downtown Toronto. While real estate players we interviewed for our report this year expressed concern about the impact of the recent immigration slowdown on Toronto’s real estate market, the federal government did move in late October to increase the number of permanent residents arriving in Canada over the next three years. With Toronto attracting a disproportionate number of new immigrants relative to its share of Canada’s population, we can expect the increased immigration targets to help bolster the city’s real estate market and general economic activity.

As one speaker said at our recent event, current global uncertainty should make Canada even more attractive to immigrants. This means a bigger talent pool of skilled labour, which will further drive some companies to take up space in Toronto’s office market. And despite recent reports showing rising vacancy rates in Toronto, speakers also pointed to other factors that will continue to spark demand for office space. Many felt that while offices will change, they’ll continue to serve important purposes, such as facilitating in-person collaboration, mentoring and coaching.

An even brighter future for mixed-use development

The bottom line is that recent behavioural changes won’t reverse the urbanization trend but instead point to more distributed growth across the GTA. And one thing that hasn’t changed is the desire by GTA residents to live in vibrant, mixed-use communities offering unique experiences and diverse services and activities. This is where concepts like the 15-minute city come into play. A trend we explored in our report this year, it refers to building neighbourhoods allowing people to meet their daily needs within 15 minutes of home without having to drive.

What does this mean for some of the emerging opportunities in the GTA’s real estate market? Take the retail segment. For retail property owners looking at redeveloping struggling mall assets, the acceleration of placemaking and the rising focus on mixed-use developments offer an even greater opportunity to incorporate residential components and even warehousing and fulfillment facilities to serve e-commerce demand. And by combining retail within well located transit-oriented communities, owners can build the diverse, connected neighbourhoods people want to live in even if they’ve moved to the suburbs.

Illustration of woman walking with earbuds in while looking at a map on her smartphone

Using data analytics to chart your path

One of the challenges in this environment will be to distinguish between short-term trends that will likely fade after the pandemic and deepening changes that will continue into the future. While many of the issues we explored in this year’s report reflect accelerated trends that we expect to continue, the coming year will require GTA real estate players to be nimble in navigating an uncertain environment. One helpful tool to support your success is data analytics.

Data analytics in action

With digitization giving real estate companies access to more data than ever, they have a powerful new tool to help them make important business decisions, including when it comes to determining the optimal asset allocation for mixed-use developments. We’ve worked with several organizations to incorporate this use of data analytics into real estate projects, including transit-oriented community development initiatives. Transit agencies that have embraced data analytics solutions as part of their projects have not only saved time and money but have also been able to increase value creation across all stages of the transit expansion life cycle.

We believe the potential for data analytics to help real estate companies succeed will only grow. For more information on how you can use this tool to navigate a changing GTA real estate market, download the full Emerging Trends in Real Estate report or contact us to start a conversation.

Contact us

Frank Magliocco

Frank Magliocco

Real Estate Leader, PwC Canada

Tel: +1 416 228 4228

Miriam Gurza

Miriam Gurza

Managing Director, Real Estate Consulting Leader, PwC Canada

Tel: +1 416 687 8143

Fred Cassano

Fred Cassano

Partner, National Real Estate Tax Leader, PwC Canada

Tel: +1 905 418 3469

Wesley Mark

Wesley Mark

Partner, Deals & Valuations, National Real Estate Advisory Leader, PwC Canada

Tel: +1 416 814 5877

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