- Multi-suite residential rental demand will outpace the
available supply of units in new and existing properties, resulting
in significant imbalance.
- The industrial leasing market outlook is stable and healthy,
with supply remaining constrained, following the record-setting
performance of the past several years.
- Canada's retail property
sector recovery continued, supported by stronger-than-expected
spending growth and increased foot traffic.
- As the office leasing market softened, class A rents held up
relatively well, due in part to an ongoing flight-to-quality in
urban centres across the country.
- Investors have exercised increased caution with regard to
Canada's property market while
interest rates and inflation remained elevated, resulting in a
surplus of available capital
MISSISSAUGA, ON, Nov. 28,
2023 /CNW/ - Morguard Corporation ("Morguard") (TSX:
MRC) today released its 2024 Canadian Economic Outlook
and Market Fundamentals Report, offering a detailed
analysis of 2023 Canadian real estate market and trends to watch
for in 2024. Morguard's 26th annual edition stated that
Canada's economic growth trend
will moderate over the near term, with stronger expansion projected
for 2025. The positive momentum in the multi-suite residential
rental market and the industrial leasing market will continue in
the near term in line with the trend of the past few years. The
full report with regional insights and video is available at
morguard.com/research.
"As interest rates and inflation rates gradually decline, there
is an anticipation of pent-up investment demand within the property
sector," said Keith Reading, Senior
Director, Research at Morguard. "Multi-suite residential rental
properties are expected to be particularly attractive to investors
given their healthy fundamentals and positive rent growth
outlook."
Multi-Suite Residential Real
Estate
Demand for multi-suite residential rental units has consistently
exceeded supply, following the trend of the past few years. This
recent demand pressure was fueled by a substantial increase in
immigration and stronger-than-expected job growth. Meanwhile,
elevated interest rates and inflation have made it more challenging
for existing renter households to purchase homes, thereby
bolstering demand for rental units. Investors continued to exhibit
confidence in the multi-suite residential sector, against a
backdrop of heightened economic uncertainty and rental market
demand/supply imbalance.
In 2024, Canada's multi-suite
residential market will continue to experience increasingly
constrained supply nationwide. Rental demand is expected to outpace
the nation's supply of existing and newly built units available for
rent. The construction slowdown driven by high interest rates may
further exacerbate the persistent demand-supply imbalance
forecasted for the near term. Multi-suite residential rental
properties will be popular targets for investors given a
healthy fundamental and rent- growth outlook.
Commercial Real Estate
Canada's office leasing market
downturn continued through to the midway mark of 2023. Leasing
demand has fallen short of supply, due largely to reductions in
space utilization by the nation's businesses and government. Class
A demand and rents held up relatively well, as the popularity of
hybrid workplace models remained high. The resilience of the
nation's class A properties was driven by tenant demand for the
market's highest-quality space. Investors exhibited confidence in
class AA and A assets, in the country's largest downtown cores and
prime suburban nodes.
Both the Canadian industrial property investment and leasing
markets remained relatively stable and healthy overall. The
industrial property sector delivered solid investment performance
with an aggregate average total return of 7.3% for the year ending
June 30, 2023. While the nation's
supply constraints eased slightly as leasing demand moderated and
construction activity spiked, the Canadian industrial market
remained tight. This situation is expected to persist in the near
term, leading to modest upward pressure on rents. Specifically, the
warehouse and logistics sector are expected to continue leading the
way in terms of expansion across the country.
With stronger-than-anticipated retail spending growth and
increased foot traffic in major shopping areas, Canada's retail leasing market continued its
recovery through to the midway mark of 2023. Vacancy rates
decreased modestly in most regions, while rental rates increased
modestly in some market segments. Upward pressure on rents was
strongest in the country's landmark centres and for space in new
developments. Looking ahead, the country's retail leasing market is
expected to stabilize following a period of modest progression.
Canada's retail sales growth trend
will strengthen in the second half of 2024, driven by lower
borrowing rates and inflation levels. However, trends in the retail
investment property market are likely to remain bearish given
ongoing economic and financial market uncertainties.
Economic Factors
Canada's economy began to gear
down during the first half of 2023, due largely to the negative
effects of higher interest rates and inflation. Economic growth
will remain underwhelming in the second half and in the first half
of 2024. As a result, labour market conditions will soften.
Canada's economic growth trend
will strengthen in the second half of 2024 and stabilize in 2025,
as interest rates decline. Subsequently, labour market performance
will improve. International migrants will fill many of the jobs
created as a result of the increase in economic activity forecast
for the second half of 2024 and 2025.
Retail sales growth is expected to accelerate in the second half
of 2024 with consumption projected to increase by a solid 2.9
percent for the year. Subsequently, growth is projected to average
3.1 percent annually through to 2027. The uptick in retail sales
growth in 2024 can be attributed to the expected gradual decline in
inflation and lower borrowing rates, both of which will have a
positive influence on discretionary spending patterns. The forecast
increase in housing market demand and activity levels will drive
increased spending on housing-related items.
The 2024 Canadian Economic Outlook and Market Fundamentals
Report is a thorough study of the 2024 real estate investment
trends to watch in Canada. The
full report, including analysis for the real estate markets
of Halifax, Montreal,
Ottawa, Toronto, Winnipeg, Regina, Saskatoon, Calgary, Edmonton, Vancouver and Victoria, is available
at morguard.com/research.
About Morguard
Corporation
Morguard Corporation is a major North American real estate and
property management company. It has extensive retail, office,
industrial, hotel and residential holdings owned directly and
through its investment in Morguard Real Estate Investment Trust and
Morguard North American Residential REIT. Morguard also provides
real estate management services to institutional and other
investors. Morguard's owned and managed portfolio of assets is
valued at $18.6 billion. Please visit
www.morguard.com or follow us on LinkedIn.
Forward Looking Statement
Disclaimer
Statements contained herein that are not based on historical or
current fact, including without limitation statements containing
the words "anticipates," "believes," "may," "continue," "estimate,"
"expects" and "will" and words of similar expression, constitute
"forward-looking statements." Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause the actual results, events or developments to be
materially different from any future results, events or
developments expressed or implied by such forward-looking
statements. Such factors include, among others, the following:
general economic and business conditions, both nationally and
regionally; changes in business strategy; financing risk; existing
governmental regulations and changes in, or the failure to comply
with, governmental regulations; liability and other claims
asserted; and other factors. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. The Publisher does not assume the obligation to update
or revise any forward-looking statements.
SOURCE Morguard Corporation