Blog by Christopher Savage

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Commercial Real Estate Outlook 2014

Commercial Real Estate Outlook 2014

Canada’s commercial real estate outlook looks healthy in 2014. With continued investment from both domestic and international investors, Canada is poised to maintain positive growth as one of the most robust economies amongst the G-7 nations.

Industrial and Distribution

These two important sectors will lead much of the way through 2014 due in large part to the strong growth in e-commerce and its continued need to build regional fulfilment centers to support its one day service delivery commitments.


Manufacturing makes a comeback in America largely due to the increase of labour cost in China (15 – 20%), and the steady appreciation of the Chinese Yean against the dollar. Lower energy costs are also helping this trend. Manufacturing alone will provide for some 600,000 new jobs in North America in 2014.


As the North American economy sees an increase, so does the hotel business. These aren’t at peak levels yet but occupancy has steadily risen since 2010 to just over 65%. Corporate travel is the bread and butter of the accommodation industry and all indicators continue to grow for all participants. Limited service hotels are expected to perform better than their full services counterparts due largely to prudent fiscal management.


Moderate and high income development projects will drive much of the growth in this sector in 2014. This change comes amidst a more positive economic outlook than in the previous 8 years. The recent lack of interest in this sector has created a short supply  resulting in a pent up demand for this product class.


Brick and mortar retail is still undergoing the most significant shift in consumer demand as technology and e-commerce are dictating a “new think”. It’s safe to say that size does matter but smaller rather than larger. The mega centre mentality is gone and retailers are scrambling to find the best size match for their new business model. Urban mixed use properties are clearly the market winners as fifty something’s continue to rush back into the city leaving their snow shovels and second car behind.


Caution is the corporate watchword for office builders in 2014, as this trend is clearly on the down. Companies are learning to get by with fewer employees, reducing work space per employee and more people choosing to work from their homes. This is a continued trend that sees no end. The tightening of the office market is here to stay as workers become more mobile and technology is again dictating a “new think”. Rents and vacancy rates will remain somewhat capped in 2014 as corporate growth no longer equates to more space.