- Multi-suite residential rental fundamentals will gradually
strengthen during 2022, as demand is bolstered by increased
immigration and loosening of pandemic restrictions
- Office property investment activity remained relatively muted
over the recent past, due primarily to the sector's somewhat
uncertain outlook.
- Industrial real estate is predicted to continue outperforming
in 2022, keeping with the trend of near record-low availability
rates over the past few years
- Retail property sector fundamentals are expected to gradually
stabilize over the near term
MISSISSAUGA, ON, Dec. 21, 2021 /CNW/ - Morguard Corporation
("Morguard") (TSX: MRC) today released its 2022 Canadian
Economic Outlook and Market Fundamentals Report, providing
a detailed analysis of the 2021 Canadian real estate market as well
as trends to watch for in 2022. Morguard's 24th annual
edition revealed that investment performance remained strong in
2021 for industrial and multi-suite residential rental properties.
Office and retail showed signs of stabilization due to efforts to
reduce the spread of COVID-19 and the subsequent easing of some
restrictions. For 2022, Morguard forecasts increased investor
activity following the anticipated post-pandemic full economic
reopening. The full report with regional insights and video is
available at morguard.com/research.
"Multi-suite residential rental and industrial properties are
anticipated to continue outperforming when compared to office and
retail assets," said Keith Reading,
Director, Research at Morguard. "As the economic picture improves
in 2022, investors will broaden their investment horizons in 2022
by looking to increasingly acquire office and retail assets."
Multi-Suite Residential Real Estate
Decreased levels of immigration and post-secondary students
entering the country throughout 2021 contributed to reduced demand
in the multi-suite residential segment. The national vacancy rate
rose 1.0 per cent year-over-year in October
2021 to a four-year high of 3.2 per cent, with more
pronounced vacancy in the country's larger metropolitan areas.
Despite the overall softening, investment demand surpassed supply
as the segment's sustained strength retained investors' interest.
With the reopening of Canada's
borders and continued job growth, rental demand is forecast to
gradually grow in 2022 and remain one of the preferred targets
for investors.
Commercial Real Estate
Investment activity in the office segment in 2021 was relatively
muted given the uncertainty of when pandemic restrictions would
lift. A total of $1.9 billion in
office property sales was reported in the first half of 2021, down
37 per cent year-over-year from $3.0
billion reported in the same period in 2020. During 2022,
most tenants are expected to welcome their employees back to their
physical office space after a prolonged absence. Subsequently,
tenants will begin to make decisions related to their longer-term
leasing requirements. In turn, activity levels and market
conditions will stabilize. Investor confidence will increase with
the strengthening of the sectors leasing
fundamentals, bringing a sense of certainty to the
segment.
Industrial assets had record-low inventory levels across
Canada in 2021. The national
industrial availability rate reported a low of 2.3 per cent at the
end of the first half of 2021 with even lower rates in Vancouver, Toronto, and Montreal. Warehouses, logistics and e-commerce
businesses continued expanding at a relatively rapid rate,
continuing the trend seen since mid-2020. As leasing demand
continues to outpace supply, tenants may have difficulty finding
available industrial space in 2022 despite an anticipated pickup in
construction activity. The strong leasing outlook will continue to
attract investment capital to the sector, resulting in record or
near-record high transaction closing volume in the coming year.
Continued restrictions for in-person shopping contributed to the
retail segment's reduced activity in 2021. Short-term lease
renewals and government aid supported Canadian retail operations
throughout the course of the year. Despite the support, extended
lockdowns contributed to declines in landlord and retailer
revenues, and, in some cases, forced independently owned stores to
close permanently. Retail sector performance patterns will improve
in 2022, with the loosening of pandemic restrictions and the return
of shoppers to retail centers. With a more confident outlook,
assets with necessities-based tenants will remain a prime target of
investors. Leasing market conditions are forecast to stabilize in
the second half of 2022, after an initial adjustment period.
Economic Factors
Canada's economy is expected to
continue to bounce back from the pandemic-driven correction in
2022, with output rising between 4.0 per cent and 5.0 per cent on
an annualized basis. The services sector will be a key driver of
growth in the coming year, following proportionately stronger
expansion in the goods production sector in the earlier stages of
the pandemic. Growth will continue at a more moderate rate in 2023,
given the winding down of government support programs and monetary
policy tightening.
In 2022, Canada's labour market
will strengthen, driven by the largely positive economic growth
trend. By the fall of 2021, the unprecedented job losses due to the
pandemic had been recouped, which drove the national unemployment
rate down closer to the pre-pandemic level.
Retail consumption and housing market activity will support
economic growth in 2022, in support of largely positive commercial
real estate sector performance trends.
The 2022 Canadian Economic Outlook and Market
Fundamentals Report is a detailed analysis of the 2022
real estate investment trends to watch in Canada. The full
report, including analysis for the real estate markets
in 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 $19.4 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