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Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 22, 2018 71   0   0   0   0   0
Investment in Canada’s commercial real estate sector has been strong all year and—especially in the cases of Toronto and Vancouver—should continue well through 2019. According to a report by Morguard, titled The 2019 Canadian Economic Outlook and Market Fundamental Report, 2018 is shaping up to be a record year for investment in the sector. “It’s a real struggle both in Vancouver and Toronto to find office space,” said Keith Reading, Morguard’s director of research and the author of the report.“Choices are very limited for 10,000-plus square feet and rents are at peak for this cycle.There’s no shortage of capital, which is just a function of supply, and 2018 being a record year for investment will continue into 2019.” Toronto and Vancouver have buoyant economies and the technology sector in both cities is firmly rooted.According to CBRE, Toronto ranks fourth in North America for growth and employment in the tech sector. While Vancouver is experiencing growth in that sector too, the exorbitant cost of living coupled with parsimonious salaries could pose a problem. “Vancouver has always had a unique situation in that the cost of living of living here is extremely high, higher than anywhere else in Canada,” said Rene Palsenbarg, Marcus &Millichap’s regional manager and managing broker.“When you look at salaries in
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 22, 2018 67   0   0   0   0   0
Steady price growth along with the possibility of further rate hikes will affect hopeful home buyers in Montreal much more acutely, according to market observers. In a recent analysis, Desjardins senior economist Hélène Bégin reported that the Bank of Canada might hike its benchmark rates two more times next year, leading to higher mortgage rates that would definitely represent a considerable chunk of buyers’ funds. While healthy in terms of magnetizing better investment, the trend will put first-time buyers at a severe disadvantage, according to Quebec Federation of Real Estate Boards manager of market analysis Paul Cardinal. “It’s going to limit the amount they can borrow, so it’s going to limit the increase in prices, they will have to make a compromise, sometimes it means a smaller dwelling, sometimes it means going further from downtown but I think they will still be on the market,” Cardinal told the Montreal Gazette. Read more:Montreal housing market continues hot streak to 2020[1] “All the areas of the Montreal metropolitan area will be hot and remain hot in 2019, including the island of Montreal, but there is a little more supply in the suburbs and we will see a lot of first-time buyers want to get into the market now because
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 22, 2018 66   0   0   0   0   0
In its announcement earlier this week, the CMHC introduced the latest project to benefit from its Rental Construction Financing initiative:Conrad by Cressey Development in Vancouver. The $40.2-million investment will ensure a prolonged haven of affordability for the city’s struggling middle-class families. “Over 60% of the units will have rents at or lower than 30% of median household income in the area and, under an agreement with the City of Vancouver, this affordability will be maintained for 60 years,” the Crown corporation stated. The rental housing project will consist of several buildings offering a total of 115 units. Read more:Vancouver’s tenants and their single-family home dreams[1] Earlier this month, Andy Yan of the City Program at Simon Fraser University said that while price declines in B.C.have become evident recently, a more tangible intervention from the provincial leadership’s part is still needed to ensure better affordability. This is especially important since the government has yet to truly act on earlier promises like a $7-billion, 10-year housing affordability strategy. “They are not actual shovels in the ground yet,” Yan told The Canadian Press “It will take a combination of supply and demand policies to really get us out of the housing crisis mess.” Are you looking to invest
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 20, 2018 68   0   0   0   0   0
Vancouver’s multifamily housing sector is experiencing a glut of inventory, but with low yields and high buy-ins, investors have taken a step back. A report from Marcus &Millichap showed the average cap rate compressed 40 basis points over the last year to 2-4%, but investors chasing yield turned to Coquitlam and Chilliwack where they enjoyed as much as 5%. While Vancouver yields could be described as in the doldrums, vacancy rates are persistently low. “In terms of multifamily income-producing properties, the Vancouver market has been one of the strongest in North America with vacancy rates hovering around, or below, 1%,” said Rene Palsenbarg, Marcus &Millichap’s regional manager and managing broker.“Because of that, the average rent per square foot is pretty significant.” Multifamily sales have hit a three-year low, but Palsbarg attributes that to an inventory surplus. “It’s more of a by-product of inventory because there’s a glut of product coming onto the market, so it’s just stabilizing itself,” he said. But the overall market in Vancouver has born witness to a significant downturn that began around July, which marked an 18-year low in sales.By last month, the year-over-year decline stood at about 35%. “That equates to a 27% decline on the 10-year average because we had a very robust 2016
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 20, 2018 67   0   0   0   0   0
While B.C.’s home prices have shown signs of going down in recent months, a market observer has argued that firmer action from the government is still needed to fully address the city’s affordability crunch. Andy Yan, the director of the City Program at Simon Fraser University, said that the leadership has yet to fulfill crucial announcements like its much-touted $7-billion housing affordability strategy, a project expected to take 10 years. “They are not actual shovels in the ground yet,” Yan told The Canadian Press “It will take a combination of supply and demand policies to really get us out of the housing crisis mess.” Such intervention is especially important now, as the aforementioned price declines – attributed by many to taxes aimed at foreign buyers and empty residences – are not apparent in the middle and lower price ranges. According to a recent analysis by Knight Frank LLP, Vancouver saw the largest drop in average sale prices in the luxury segment (11%) worldwide during Q3 2018. Read more:New tax may stifle investment in B.C., fears industry[1] Data from the Real Estate Board of Greater Vancouver showed that the benchmark price of a non-luxury home in the region was at $1.062 million in October, just a tiny bit
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 20, 2018 65   0   0   0   0   0
The logistics sector’s specific needs will considerably impact the valuation of commercial and industrial land in Toronto, according to Bill Argeropoulos of Avison Young. “In the past, industrial space was predominantly used for manufacturing activities, and many buildings were serviced by direct rail-spur connections,” Argeropoulos noted.“Today, logistics, distribution and warehousing are the main industrial-space uses;as a result, many of these rail spurs have been removed, giving way to greater use of container shipments via intermodal facilities.” Data released by Morguard Corporation in late October indicated that this versatility, along with strong leasing volume and economic stability, has granted the Canadian industrial real estate segment a “very positive near-term outlook.” Industrial investment across the country reached a record-high $6.1 billion as of Q2 2018, Morguard reported. “With quality space at a premium across much of the country and a solid fundamental outlook for the sector, we expect to continue seeing strong activity to finish the year,” Morguard’s Keith Reading said. Read more:This industry hungers for Toronto’s commercial spaces[1] Proximity to transport nodes will have an especially notable impact on the investment potential of a property, Argeropoulos explained. “As a result of the need for increased last-mile efficiencies, demand for industrial real estate more connected to the masses is outpacing supply, reducing
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 18, 2018 73   0   0   0   0   0
The government of Ontario is exempting new builds from rent control. In doing so, the Doug Ford-led Progressive Conservatives are partially rescinding one of the more controversial components of the Fair Housing Plan, introduced in 2017 by the governing Ontario Liberal Party.Existing tenancies are still subject to rent control. “Many people in Ontario face challenges in finding suitable, affordable rental accommodations, in part due to an extended period of under-building of rental units,” read an official release from the government.“Since 1992, rental unit construction has not matched household formation.Approximately 20 per cent of Ontario households live in purpose-built rental housing.In 2017, the level of new rental construction would accommodate only 10 per cent of new Ontario households.If construction of rental units had kept pace with underlying demand, construction would have started on an additional 6,100 units in 2017.” Additionally, as part of its Housing Supply Action Plan, the PC government is putting an end to the Development Charges Rebate Program, which subsidized units earmarked for affordable housing. While Ontario grapples with a 1.6% vacancy rate, the situation is even direr in Toronto where only 1% of total units aren’t occupied and the average rent on a one-bedroom condo is more than $2,000.Kathleen Wynne’s Liberal government imposed rent control on all units, capping annual increases at 2.5%.
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 18, 2018 78   0   0   0   0   0
The affordability crunch in Vancouver has pushed rental apartments and condo units to the fore as the budget choice for young families – but if it were up to the renters, they’d rather settle down on a single-family home elsewhere. Indeed, almost 30% of the respondents of a new study published by Altus Group last week admitted that if price was not an issue, they would choose to live in a single-family home in the suburbs instead of staying in a rental unit in the downtown area. The only thing still preventing 32% of Vancouver’s young tenants from moving is the fact that they are still saving for their down payments, the survey noted. Another 11% stated that they don’t feel that they will qualify for the tighter mortgage stress tests, while a similar proportion of young renters said that they are waiting for their opportunity until home prices go down. A similar analysis by Sotheby’s International Realty Canada found that 83% of young households nationwide would prefer to raise their families in detached homes over any other housing type, everything else (including prices) being equal. Read more:Downtown Vancouver has highest average price per square foot[1] “The popular perception is that people in modern families have typically
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 18, 2018 76   0   0   0   0   0
A month after the federal Cannabis Act came into effect, a significant number of Canadians still harbor negative views about the provision that allows home owners to cultivate up to 4 plants indoors, according to a recent analysis by real estate information portal Zoocasa. In the study, 57% of respondents believed that growing marijuana in a home would considerably devalue that property.Another 52% said that they would have definite second thoughts about buying a residence if the former owner grew the plant privately. “A lot of the negative sentiment in our findings is stemming from this uncertainty among homeowners,” Zoocasa managing editor Penelope Graham stated, as quoted by the Financial Post. Only 15% of those surveyed said that the factor does not affect their purchase decisions one way or the other, and that they are open to growing the plant themselves. Read more:Pot industry investors should take heed of this fact[1] Smoking cannabis is seen to have a more serious effect, with 64% of respondents saying that the consumption of pot inside a residence will severely impact a home’s market value. Another major factor would be the presence of a dispensary in the vicinity of a prospective home purchase.Around 48% of the Zoocasa survey’s participants admitted that
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 15, 2018 91   0   0   0   0   0
Grappling with affordability in the low-rise market and paucity of space in condo apartments, Greater Toronto Area homebuyers are flocking to townhouses in droves. In 2008, townhouses comprised only a quarter of sales in the low-rise sector, but as of this October, row houses accounted for 42% of low-rise sales. “Townhouse product fits between apartments and the detached housing market, and we expect to see more demand for that asset,” said Matthew Boukall, VP of product management, data solutions at Altus Group.“When we look across different markets they’re generally flat.In Toronto, the market had a rough start to the year, where we saw sales plummet, but within that detached housing market of single-family homes and row townhouses, the latter accounted for 42%.They grew the low-rise market segment.” According to Christine Cowern, a sales representative and team lead at Keller Williams Reffered Urban Realty, townhouses are ideal for homebuyers who struggle with affordability but who also resist too much compromise. “We’ve been telling our clients for years that townhouses are a fantastic compromise between a house and a condo apartment,” she said.“Freehold towns are on the higher end but still cheaper than owning a house, while condo towns are quite a bit cheaper.For someone who is new to the market or owns a condo
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 15, 2018 77   0   0   0   0   0
Toronto’s apartment segment is experiencing a healthy infusion of new supply, but a new analysis by Marcus &Millichap indicated that the rate of addition is not proving enough to address the inflamed levels of demand for the city’s residential spaces. The Toronto Multifamily Spotlight report for November 2018 stated that the first 3 quarters of 2018 saw the addition of 2,500 new apartments, putting the delivery rate on track to reach the highest level since 1994. However, elevated prices in the single-family segment and increased population growth fuelled by immigration have pushed the benchmark price for the property type at $863,500 in September, well out of reach of most entry-level buyers. “With a limited number of starter homes on the market, apartments have been virtually filled to capacity with a vacancy rate under 1%, keeping rent growth in the mid-single-digit range and motivating the development of new units,” Marcus &Millichap said. Read more:Construction costs, land crunch threatening GTA condo affordability[1] In addition, the influx of skilled professionals that will be employed by Toronto’s burgeoning tech sector is predicted to add 43,500 new households over the next 18 months. “Intel, Microsoft and Uber are just some of the companies to recently announce plans to grow their footprint and
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 15, 2018 84   0   0   0   0   0
The latest Altus Group analysis found that demand for Vancouver’s office spaces significantly pushed down vacancy from a near-record level of almost 11% in mid-2016 to around the 7% range in the middle of this year. This was even more pronounced in the downtown area, which saw vacancy shrink from 7% a year ago to below 5% in mid-2018. However, the Vancouver Flash Report 2018 noted that Vancouver’s office space supply received approximately 1.3 million square feet of new additions over the past 8 quarters, which was only less than half the amount injected in the market from mid-2014 to mid-2016. Moreover, this paled in comparison to the 5 million sq.ft.of new industrial space that Vancouver had from mid-2016 to mid-2018. Fortunately, the nearly 2.8 million sq.ft.of office space under construction as of mid-2018 is expected to keep up with demand.The new additions would comprise 2 years of supply, taking into account the annual absorption trends from 2015 onwards. Read more:Vancouver commercial project to significantly pump up supply[1] A late October report by RE/MAX Western Canada indicated that sustained investment by major technology firms will propel the Vancouver office market for the foreseeable future. With leading tech companies like Amazon and WeWork steadily growing
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 81   0   0   0   0   0
These days, Montreal is riding high—the city`s economy is surging and so is its real estate market—but that’s inevitably attracted interest from foreign buyers whom the mayor fears is driving unaffordability. Valerie Plante, elected mayor last year, wants to follow Vancouver and Toronto’s lead in implementing a foreign buyer tax.However, according to Carrie Law, CEO and director of, the largest website in China for international real estate, the proposed tax would actually harm Montreal’s renters who comprise two-thirds of the city’s households. “A foreign buyer tax would favour the one-third of Montreal households who are owners over the two-thirds who are renters,” she said.“That means two out of three care more about rents than prices.I do agree that buyers from China play an important, minority role in certain parts of the condo market.Most new condos bought as investments by foreign buyers will end up as rentals.The current condo boom could lead to foreign buyers financing lower rents for locals.It’s hard to understand why the government opposes the possibility of lower rents.Rents have a bigger impact on many more people than do prices.” As mortgage broker George Macris of Dominion Lending Centres Centre-Ouest in Montreal notes, the municipal government doesn’t have the power to instate a housing tax.Plante’s party, Projet Montreal, first called for a tax
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 83   0   0   0   0   0
Mounting development costs along with geographic limits are placing the Toronto condominium segment’s relative affordability at risk, according to a new market report by RE/MAX of Ontario-Atlantic Canada Region. Robust immigration and population growth have galvanized demand to the point where resale condos (along with townhouses) now represent almost 37% of total residential activity in the GTA, but this boon for the industry might also prove to be a double-edged sword. “The necessity to ‘build up’ has never been more prevalent in a city that has seen its population climb from one census to the next,” RE/MAX of Ontario-Atlantic Canada Region executive VP and regional director Christopher Alexander said. The onus is upon the regulatory side to remedy this ticking time bomb, he argued. “To prevent the run-up we’ve seen in housing values in the past, all levels of government must work together with developers to streamline the building process.We need to create more affordable GTA housing options that can accommodate buyers and renters at every price point,” Alexander explained. Read more:Rental demand to boost further apartment construction – CMHC[1] The market pressure is evident when one considers that the city’s condo apartments keep getting snapped up by hopeful home owners and investors alike, despite the average price increasing
Jarek Bucholc ||Street Smart RE InvestingJarek Bucholc ||Street Smart RE Investing November 13, 2018 94   0   0   0   0   0
While the Waterloo Region is still a relatively affordable haven especially when compared to red-hot Toronto, the near future of the market will primarily cater to the preferences of two major demographics:middle-aged buyers of second homes, and baby boomers (ages 55-74). “These two age cohorts represent great opportunity,” Canada Mortgage and Housing Corp.regional economist Ted Tsiakopoulos noted last week, as quoted by the Waterloo Region Record. The average home price in the region grew by 7.7% year-over-year in October to reach $489,725.This trend has made access to equity – something that a large proportion of younger would-be buyers simply won’t have at the time – a particularly powerful tool. Read more:Multiple offers slowing down in non-Toronto ON markets[1] What’s worse, a bevy of other factors including tighter mortgage rules and interest rate hikes would only make life even harder for the younger generation hoping to establish roots in the region. “First-time homebuyers aren't going to be in the driver’s seat,” Tsiakopoulos said.“This is a different market that we are heading into.” Updated numbers from the Kitchener-Waterloo Association of Realtors showed that affordability pressures pulled down year-to-date sales volume by 13% compared to the same time last year.   Related stories: Non-Toronto markets in Ontario
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