Housing search

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Despite economic news that would traditionally give landlords pause, Canada’s real estate industry remains healthy — and the numbers back that up, says Steve Marino, executive vice-president, portfolio management with GWL Realty Advisors.

He said Canada saw $50 billion in market activity last year.

“That’s down relative to 2021 and 2022, but it would still be approaching one of the most significant years of real estate investments,” he said. “I would say that’s probably surprising to a lot of observers of the industry, just given the real estate headlines of the day.”

He said high interest rates and economic uncertainty might heighten anxiety levels as it relates to real estate valuations and the positioning of some classes. But the real estate market has proven resilient, driven primarily by private and foreign investment.

“Investors who historically prioritized disciplined real estate strategies with robust valuation practices and well-managed capital stacks are relatively well positioned,” he said. “They’re becoming more comfortable making new commitments in this environment, looking to be more opportunistic, and really looking to make tactical shifts in their overall portfolio exposure.”

Forward-looking investors, he said, see a variety of positive market conditions in Canada, including a stable banking and political system, forecasted G7-leading economic growth, and continued robust population growth.

“These really help to position Canada as an attractive global arena for real estate investment,” he said. “We’re seeing strong market fundamentals and historically strong vacancy rates within the industrial, multifamily and retail sectors.”

The most troubled sector remains office, which is still seeing elevated vacancy rates four years after widespread Covid lockdowns. Enticing workers back to office buildings has proven difficult, but buildings situated in vibrant neighbourhoods with worker-pleasing amenities like services and shopping are doing better than others, leading to a bifurcation of the segment.

“Best-in-class assets are materially outperforming both on vacancy and the rents they’re able to command,” he said.

He said “green shoots” suggest the office segment is heading for brighter days.

“First and foremost, according to a recent Colliers Report, the average in-office mandate has increased from 2.5 days at the end of 2022 to 3.3 days at the end of 2023,” he said. “As importantly, 62% of companies have established plans to work from the office, as opposed to 49% last year.”

In addition, the office segment is benefiting from the end of a development cycle that began before Covid, and the transformation of former office space into other uses, diminishing supply.

“With no new supply and the removal of obsolete properties, that will help to stabilize markets over the longer term,” he said.

Retail real estate

Marino said while the broader retail sector is continuing to face challenges related to weakening consumer confidence, grocery-anchored retail properties continue to perform well.

“The ability to drive up to those stores, grab what you need and get back in your car, rather than having to walk through a larger centre, has really continued to resonate with society,” he said. “And it has really positioned that real estate quite successfully.”


Factories and warehouses have proven to be the “darling asset class” for real estate investors, he said.

“The ongoing growth of reshoring or re-inventorizing products into the Canadian marketplace is really helping to create and sustain pressure for that type of real estate,” he said. “When you couple those realities with the asset class’ relatively short development cycle, it helps to keep the fundamentals intact and positions the sector as one of our highest-conviction strategies moving forward.”

Multifamily housing

Marino said the essential nature of housing, its chronic undersupply, the elevated cost of homeownership and steady immigration have combined to create strong fundamentals for purpose-built rental properties.

“The asset class is continuing to deliver very attractive income returns, with potential for capital appreciation across economic cycles,” he said. “And it’s really that resilience that is giving more investors confidence in the asset class moving forward.”

Marino said real estate investors who take advantage of dislocation opportunities should do well in the long term.

“The headlines of the day can certainly create a high level of anxiety that can be disabling for investors,” he said. “But a disciplined portfolio investment strategy with active management and risk-mitigation practices provides a critical framework for success.”


This article is part of the Soundbites program, sponsored by Canada Life. The article was written without sponsor input.

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