The commercial real estate housing market in Canada is booming. With increased businesses comes an increase in the demand for office and retail space. Additionally, with the rise of e-commerce, there is also a need for warehouses and distribution centres. 

According to the latest statistics, the average annual rental rate for office space in Canada is $32 per square foot. For retail space, the average rental rate is $32 per square foot. While for industrial space, the average rental rate is $8.50 per square foot. The demand for commercial real estate is expected to continue to grow in the coming years. If you are thinking of investing in the commercial real estate market, now is a good time to do so.

Commercial Real Estate Market

Commercial Real Estate Market

Commercial real estate (CRE) is land which is solely used for business purposes. This can include office buildings, retail space, warehouses, and manufacturing plants. The CRE market in Canada is essential for businesses of all sizes as it provides the necessary space for them to operate.

The CRE market in Canada has seen strong growth in recent years. The capitalisation rates of the CBD rose by 13 percentage points to 5.6%, while the capitalisation rates of the suburbs stayed constant at 6.9%. This growth is expected to continue, with the market reaching a value of $1 trillion by 2025.

The importance of the commercial real estate market cannot be understated. It plays a vital role in the Canadian economy and provides businesses with the space they need to grow and thrive. Several factors are driving this growth, including an increase in foreign investment. The CRE market also benefits from low-interest rates and a growing economy.

To make an informed decision about investing in commercial real estate, it is important to understand the market. Here are some key statistics about the commercial real estate market in Canada:

    • The average price of a commercial property in Canada is $1.5 million.
    • The vacancy rate for office space in Canada is 16.3%.
    • Average Downtown Toronto commercial rental rates in 2022 were $41.9 /sq ft.
    • According to Statistics Canada’s Job Vacancy and Wage Survey, job opportunities rose by 4.7% between the first and second quarters of 2022.
    • The highest average seeking net rates were recorded for industrial space in Victoria and Vancouver, which came in at $16.47 and $16.31 per sqft, respectively.

Lease Stats of The Commercial Housing Market

Lease Stats of The Commercial Housing Market

Canada’s commercial real estate housing market has seen strong growth in recent years. The following are some key commercial lease stats in Canada:

    • After an equal rise (+0.8%) in the previous quarter, corporate rents climbed 0.8% in the last quarter of 2021.
    • IT businesses have increased the percentage of office space leased in Canada by 60% from the initial quarter of 2020 to the third quarter.
    • By 2027, the Canadian commercial properties market is projected to expand at a compound annual growth rate of 11%. Onni Group and Westbank Corporation are two of the most important businesses.
    • There will be an estimated yearly growth of 3.8% in the capacity of the Canadian Industrial Equipment Rental and Leasing market from 2017 to 2022.
    • With a rolling average term of the lease of about 14.2 years, this includes the units in Canada for the financial years 2015 and 2014, as well as for the five quarters of 2015 and 2014.
    • The CRSPI tracks the annual percentage growth in rental prices for retail property throughout Canada.

Sale Stats of The Commercial Housing Market

The commercial real estate housing market in Canada is booming. As per the Canadian Real Estate Association, February had the maximum average house price in Canadian history, reaching $816,720. The average prices of commercial sale stats in Canada have also gone up by 7.4%.

Several factors are driving this robust growth in the commercial sale stats in Canada’s real estate market. These include :

    • The Canadian economy is doing well and businesses are expanding. This is resulting in an increased demand for office and retail space.
    • Interest rates remain low, making it an attractive time to invest in property.
    • There is a strong potential for foreign investment in Canadian real estate, especially from Chinese buyers.

With all of these factors working in its favour, it is no wonder that the commercial real estate market is booming and will continue to grow. If you are thinking of buying or selling a commercial property, now is a great time to do it!

The Final Word

The commercial real estate market in Canada has been strong in recent years. The vacancy rate has been declining and rental rates have been rising. The above-mentioned commercial lease stats in Canada are an indicator that it is a good time to invest in real estate market. However, there are some risks to investing in commercial real estate as well. There is a possibility of the market changing suddenly and interest rates could rise making it difficult to finance a purchase. 

Overall, the commercial real estate market in Canada is a good place to invest. With rising rental and falling vacancy rates, there is potential for good returns on investment.

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Frequently Asked Question (FAQs)

How big is the commercial real estate market in Canada?

In 2019, Canada's commercial real estate market was worth $2.2 trillion. This is a significant increase from the $1.18 trillion value in 2018. The market is expected to continue to grow in 2022 and beyond.

What is the future of commercial real estate?

As the population of Canada continues to grow, so will the demand for commercial real estate. The Canadian commercial real estate industry is estimated to grow at an 8% CAGR during the forecast period (2022-2027). This means we can expect more office buildings, retail space, and warehouses built in the coming years.

Is it worth buying commercial property?

Commercial real estate has outperformed other asset classes in recent years and is expected to continue to do so in the coming years. The current market conditions are favourable for buyers, with low-interest rates and a large selection of properties available. Investing in commercial real estate can provide a number of benefits, including potential rental income, tax advantages, and appreciation.

Is commercial real estate a good investment in 2022?

In 2022, commercial real estate property in Canada saw strong sales and growth. While the market could see gains for the rest of 2022, several factors could dampen or even reverse the positive momentum seen thus far.

What type of commercial property is most profitable?

The most profitable type of commercial real estate includes the following: Office buildings and retail space - Industrial properties can also be quite profitable, but they often require a lot of upfront investment. Apartment buildings - This offers a steady stream of rental income. However, they can also be quite risky as the demand for apartments can fluctuate greatly depending on economic conditions.