December 8, 2015 Neil warshafsky

Which Commercial Real Estate Sector Will Standout in GTA in 2016?


The fact is obvious that the boom which the Canadian real estate sector had been experiencing for the past few years has slowed down gradually and the predictions are that in the coming year the situation will remain the same: the market will remain fairly stable in its current situation and not experience any substantial growth or boom.

Although the market appears to be on a very slow trending decline and will continue to exhibit the same behavior. Accordingly, there is no point for pessimism. The market should remain the same throughout 2016. There are sectors within in the GTA that can still be acquired affording the opportunity to make a profit in the years to come. Before these lucrative sectors are discussed, it is important that you get a glimpse of the existing situation of the Canadian commercial real estate market.

The growth of online shopping, high currency exchange rates and even higher consumer debt levels are making life increasingly more difficult for the retail sector. The office sector is also facing somewhat the same situation where the record new construction has prepared an abundance of office space bringing down the rate of per square foot acquired. The industrial market appears to have held its own with a stable vacancy rate. Older properties are beginning to experience vacancy due to built in obsolescence. The condo boom has slowed somewhat but is still moving forward. 2016 appears to be the first year where may see new purpose built residential rental buildings outstrip condos in construction, with the burgeoning growth in this sector. All in all, the market is at a relativelow this year and the prediction is that it will continue on being the same for the rest of the year in these sectors.

The decreasing energy prices and the plunging Canadian dollar has made the market suitable for manufacturing, transportation and warehousing commercial real estate sector, especially in the Eastern part of Canada with prime activity to take place in GTA and Montreal. In 2016, developers and real estate investors will turn their attention towards the GTA and invest in manufacturing, warehousing and the transport sector.

With energy prices decreasing, resources and workforce will come cheaper to the manufacturing sector, thus, more and more investors will turn towards industrial sector and the rates of real estate in this sector will increase. The same goes for transportation as well, where the low oil prices along with the increasing need of transport for the suburban population will drive the transport sector, thus the associated transport facilities and depots will require real estate sector to accommodate and fulfill the increase in transport needs. Ergo, industrial and transportation are two commercial real estate sectors in GTA that will give you profit even in the steady market of 2016.

The third sector that can also bring you profit despite the saddening situation of the market is warehousing commercial sector. With cost of manufacturing going down and the production increase forecasted in the years to come the need of warehouses as storage units is going to increases. Moreover, warehouses and transport facilities is a trend that is going to rise in the coming year, therefore, the warehousing sector will also grab its fair share in the days to come in the GTA.

In spite of the fact that market is not expected to change much in 2016, yet not only one rather three sectors are expected to give substantial profits in the GTA commercial real estate market. Industrial, transportation and warehouse real estate is what you should be eyeing on in 2016 to make even the market decline look profitable.