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Canadian real estate markets to watch in 2022

Canada's largest cities

While the Vancouver and Toronto real estate markets continue to lead Canadian cities in terms of investment and development prospects, every region has its own opportunities and challenges. Explore the 10 Canadian real estate markets to watch in 2022.

Vancouver

For the third year in a row, Vancouver is the top market to watch. Investors and developers alike are feeling optimistic given Vancouver’s strong economic outlook, the restart of immigration activity and an abundance of capital.

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Toronto

From industrial assets to housing, the Greater Toronto Area’s real estate market is a key source of strength as the region’s economy kicks into gear after multiple lockdowns. But the strength of these sectors is also creating challenges.

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Montreal

While Montreal’s economy is on the mend, a competitive environment is creating rising business pressures requiring companies to explore creative solutions to optimize their portfolios.

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Calgary

There’s renewed optimism in Calgary, thanks to improving economic conditions and ongoing economic diversification after a difficult period for Alberta’s key oil and gas industry.

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Other key Canadian cities 

Ottawa

Ottawa is in growth mode: the city is seeing new jobs created in the technology sector, and the second phase of its light-rail transit plan is underway and opening up more opportunities for condominium and rental development.

The Conference Board of Canada (CBoC) is predicting a 3.5% rebound in gross domestic product (GDP) this year in Ottawa-Gatineau. The residential housing market has been particularly strong, with remote working creating new opportunities for people living in more expensive regions like the Toronto area to move to Ottawa.

Interviewees are paying close attention to trends in the office market, which had a downtown Class A vacancy rate of 7.7% in the second quarter of 2021, according to CBRE. Landlords are updating amenities and common areas in preparation for a return to the office and to attract and retain tenants. But there’s still hesitation from tenants about the return to the office as they wait to see how the federal government handles the issue.

Ottawa’s industrial market is seeing high demand from e-commerce and distribution companies, and new projects are banking on low vacancy and rising rental rates. But downward pressure on capitalization rates is making it harder for some players looking at investing in new industrial developments.


Halifax

Halifax’s population is growing, and the region is facing low rental vacancy rates and housing inventories. The CBoC is predicting GDP growth of 4.9% in 2021, followed by 3.7% next year.

While international immigration fell during the pandemic, interprovincial migration has buoyed the housing market, particularly as homebuyers from other provinces look for more affordable homes in Halifax. But Halifax doesn’t tend to see rapid growth, which is leading to a lag in building the housing and related infrastructure and services to meet this rising demand.

The Canada Mortgage and Housing Corp. (CMHC) expects the rental market to remain strong as increased migration boosts housing demand in Halifax. And as Halifax grows, the municipality is targeting sustainable growth through its rapid transit strategy. The plan includes both bus rapid transit and ferry services and, as part of its strategy, the municipality is looking at opportunities to incorporate transit-oriented communities.

In the second quarter of 2021, the vacancy rate in the downtown Class A office market reached 26.7%, according to CBRE, which noted the city has seen some offices taken off the market for conversion to multifamily residential uses. The industrial market remains strong, with Colliers reporting a vacancy rate of 3.1% in the second quarter of 2021.


Winnipeg

Winnipeg’s GDP will rise 4.6% in 2021, according to the CBoC. CMHC expects the single-detached housing market will begin seeing an increase in starts in 2021—in part due to low inventories in the new and resale markets. Low inventories could also affect the condominium market, spurring new construction, while renewed immigration activity will drive multifamily starts in 2022 and 2023, according to CMHC’s spring 2021 housing market outlook.

Of note in the city is a new addition to Winnipeg’s downtown skyline: a 40-storey residential apartment tower that’s being touted as the tallest building between Toronto and Calgary.

The downtown Class A office vacancy rate rose slightly to 11.8% in the second quarter of 2021, according to CBRE. Winnipeg’s industrial market remains strong, with an availability rate of 3.4% in the second quarter of 2021, according to Colliers, which noted the city is seeing high leasing and sales activity.


Edmonton

Edmonton’s economic outlook is looking brighter, in part due to a recovery in oil prices from 2020 lows. The CBoC predicts a rise in GDP of 6.4% in 2021. The 2021 prediction suggests the city will see the highest growth of 13 major census metropolitan areas analyzed by the CBoC this spring.

Rising demand in 2020 affected home inventories, but the CBoC predicts housing starts will increase each year between 2021 and 2025. When it comes to densification and transit-oriented communities, Edmonton continues to move forward as the city encourages the development of both mid- and high-rise developments with a goal of creating nodes and corridors that offer live, work and play options.

Edmonton’s downtown office market is seeing increased activity, with some tenants trading up and seeking spaces with more amenities. Vacancy rates in Class A office space decreased slightly to 18.4%, according to CBRE’s report for the second quarter of 2021. One interviewee said rising capitalization rates for office properties in the city are creating opportunities for those looking at the Edmonton market.

Leasing activity remains strong in the greater Edmonton area’s industrial market, which had 4.1 million square feet of space under construction as of the second quarter of 2021, according to Colliers. The availability rate was 9.5% in the second quarter, Colliers said in its recent report on the industrial market.


Quebec City

Despite predicting a healthy 5.6% rise in GDP in 2021, the CBoC expects housing starts will fall this year and continue decreasing over the period spanning 2022-25.

While demand for single-detached housing increased at the start of the pandemic, spurring new construction, CMHC expects this trend to taper off in 2022. In the rental market, which has a large number of units under construction, CMHC foresees a relative balance between supply and demand, helping keep the vacancy rate stable this year.

After some changes to the proposed route, Quebec City is proceeding with its tramway project as part of a broader transportation plan for the region, which also includes a new tunnel creating additional links to surrounding communities. The industrial market in the region is strong, with new developments including a large data processing centre planned for Lévis.


Saskatoon

Saskatoon’s economic recovery is underway, with the CBoC predicting GDP growth of 5.4% in 2021. For 2022-25, it predicts average GDP growth of 3.3%, the fastest rate among 13 major census metropolitan areas analyzed by the CBoC this spring.

A strong resale market and dwindling supply of new homes, coupled with migration trends and an improving economy, will spur the residential market, according to CMHC’s spring 2021 housing market outlook. Construction of Saskatoon’s bus rapid transit system is also expected to start in 2022, which the city hopes will support transit-oriented communities.

While office vacancy has continued to rise, a new 18-storey tower in Saskatoon—which will be the tallest building in Saskatchewan—is expected to play a key role in the city’s downtown renewal as part of a three-phase mixed-use project.

The industrial market continues to be relatively stable, according to Colliers, which reported a 3.5% vacancy rate for Saskatoon in the second quarter of 2021.

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

Real Estate Advisory Leader, Partner, PwC Canada

Tel: +1 416 814 5877

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