Altus Group offers glimpse at 2021 and beyond

TORONTO — Altus Group analysts Matthew Boukall and Raymond Wong offered snapshots and predictions for Canada’s commercial real estate market at the recent Altus Group State of the Market webinar:

• National investment trends: Total building investment was down 21 per cent year over year from 2019 to 2020. The GTA saw $17.2 billion invested in commercial real estate last year, down from $22.7 billion the year before. Vancouver was next, with $7.7 billion invested in 2020, $9.2 billion in 2019. Investments by asset class showed a drop in every category with industrial down marginally in value but the number of transactions actually increasing slightly. Office deals dropped the most, from 606 transactions to 471.
• WFH expectations: 57 per cent of respondents to one Altus survey expect office tenants to downsize due to Working From Home (WFH). Sixty-two per cent expect the average downsize to be less than 20 per cent. Eighty-three per cent expect lower-quality downtown office buildings to be most impacted.
• National residential trends: Key takeaways from 2020 include remarkable sales volumes given the loss of three months of sale; strong demand speaks to pent-up demand pre-pandemic; older millennials are influencing housing demand for towns and detached but Gen Z has been sidetracked for now. There are supply challenges in Vancouver, Toronto and Montreal.
• Toronto residential: Altus foresees headwinds in condo apartment demand due to rental weakness, resale competition and uncertainty. Savings during the pandemic plus low interest rates add up to stable demand. Toronto had 1.1 months of single resale inventory in December, but Hamilton was lower with 0.7 months. The GTA had 21,681 units completed in 2020, up from 20,238 units in 2019.
• Big wins in 2020: Menkes Festival highrise apartment project in Vaughan, Ont. launched in September with 1,300 units, sold out in December; SOCO’s Anthem highrise apartment project in Coquitlam, B.C. with two towers launched in September, by December it was 75 per cent sold, with 370 units purchased.
• Vancouver residential forecast: positive market momentum going into 2021 with sales up and more new supply; prices remain high and with low interest rates it adds up to positive sales in 2021, although low immigration and the lack of international students will slow investment activity. Vancouver’s singles resale inventory dropped from 3.8 months to 2.3 months from December 2019 to December 2020.
• Industrial availability: The availability rate dropped in Vancouver in 2020, from 3.3 per cent in Q4 2019 to 3.1 per cent in the same quarter last year. It rose slightly in Toronto, from 1.9 per cent to 2.3 per cent. Rates in Edmonton and Halifax soared.