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It's easy to think Canadian retail is all doom and gloom (word that Sears Canada is on life support doesn't help), but new research shows a different story.  Avison Young CEO Mark Rose says we are seeing a shift, not a collapse; consumers are gravitating toward mobile purchasing and same-day or next-day delivery, causing a change in logistics, the supply chain, and distribution. (We're so close to never having to leave home. We may sell our door on eBay.) Real estate is shifting from retail to industrial. Snapped with Mark: AY's Texas team at the HP Byron Nelson Championship in Dallas last week—Art Green, Greg Langston, and Rand Stephens.  AY's report covers industrial markets in 35 Canadian and US metropolitan regions. Of those, 26 saw vacancy rates tighten. Both build-to-suit and spec development is on the rise, compared with a year ago. And that isn't truer than in Toronto, Canada's largest and North America's second-largest industrial market (856M SF). Toronto is the biggest development market in the nation, with 2M SF underway. Warehouses, distribution centres, and data centres are driving growth. Snapped is the Best Buy distribution centre in Brampton.  AY SVP Kevin Beaudry says we should postpone the funeral for bricks and mortar. Getting the goods “the last mile” to the customer and collecting return goods involves a lot of unpredictability (mostly in the form of dogs chasing the mailman). Bricks and mortar can be redefined into mini-fulfillment centres, able to support next-day shipping more cost effectively. "The retail supply chain will continue to see expansion by specialized 3PL firms and trend toward more but smaller-scale e-fulfillment and return facilities," he says. Kevin, second from left, is snapped at the SIOR awards. |
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Drawing Out The Investment Cycle Those expecting investment in commercial real estate in Canada to cool down will have to be more patient. According to a CBRE, investment volume in Q1, driven by pension funds, hit a new record. Investors purchased $6.8B of commercial real estate, up 12.1% ($6.1B) from Q1 2013. CBRE chairman John O'Bryan says what has changed is the purchaser profile. What was a market dominated by REITs, then private buyer, has now slid to pension funds. (Once that changes to People Finding Change in Their Pockets, we'll know the bubble is about to burst.)  They'll continue to be active, John says. “Pension funds have a pool of cheap capital to draw upon,” he says. The report shows that the robust start to the year was driven largely by demand for office buildings, land, and retail properties, especially in Eastern Canada. Investment volume in Toronto was $3.6B. (The $505M sale of Bayview Village Shopping Centre, pictured, and the sale of the Simpson Tower for $410M were the headline-makers.) |
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More Hotels Needed?The impact of the Pan Am/ParaPan Games in 2015 will be interesting to keep an eye on, as it relates to the GTA's hotel industry, HVS managing director Monique Rosszell tells us. Both occupancy and average rate are projected to reach record levels at 78% and $191, she says, and the lack of availability of land in downtown Toronto is causing a barrier to entry. Yes, the 567-room Delta Toronto South Financial Core Hotel is scheduled to open this November, along with two more hotels in the pipeline—the 127-room Bisha and a 406-room Hotel X (image, part of NYC's Library Hotel Collection) on the Exhibition grounds. “This still results in very low levels of new supply,” she says. |
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Calling All ReportersWe're looking for the Bisnow face of Canada (and it doesn't have to be as beautiful as Ryan Gosling's or Rachel McAdams'). We're in need of a Vancouver/Toronto commercial real estate reporter, with a strong journalism background and a passion for writing. You have the gift for delivering groundbreaking real estate news in our breezy but super-informative manner. You live to break stories, work a beat, travel, uncover market trends, and rub elbows with the most powerful people in the industry. Send your journalism-oriented resume to: matt.black@bisnow.com. |
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