The industrial real estate market in Canada is thriving despite concerns of higher interest rates and inflation in other sectors of the economy. According to the RE/MAX 2023 Commercial Real Estate Report, industrial properties continue to outperform other asset classes in 12 commercial real estate markets across the country.
This impressive demand can be attributed to several factors, including the shifting needs of manufacturers and distributors, changing consumer and workplace patterns, and innovative ideas about the future of warehouses. While there was already a demand for distribution and warehouse facilities in southern Ontario and British Columbia, this demand is now spreading to other regions and neighbouring provinces.
Alberta and Newfoundland are particularly hot markets for industrial real estate. The increase in e-commerce is one of the main drivers of this demand. With more people working remotely, there is a need for warehouses in industrial buildings to facilitate manufacturing and the distribution of goods. This trend is expected to continue in the coming years as remote work becomes more prevalent.
The report also highlights the attractiveness of Alberta’s industrial market due to government incentives and favourable zoning and tax policies. Alberta’s municipal governments, particularly Edmonton and Calgary, serve as “inland ports” that ship and receive goods via air, rail, and ground. Additionally, the industrial real estate boom is fueled by commercial real estate investors from Ontario and BC seeking sites to support construction and building conversions.
In Newfoundland, the industrial market is strong due to rising energy prices. The province’s status as an oil producer creates a demand for industrial sites to support the sector. Across the Atlantic provinces, industrial property markets are benefiting from population growth driven by immigration, as well as increased activity in the Port of Halifax and government contracts requiring industrial property.
Builders and investors in the industrial real estate market are also focusing on energy efficiency and sustainability. As the effects of climate change become more evident, there is a push for sites with energy-efficient cooling and heating systems. Companies and governments alike are seeking properties with higher environmental standards.
While the demand for industrial property in Canada is strong, it is crucial for infrastructure to keep up with this growth. Roads, rails, ports, and power supplies must be able to support the increased demand in industrial real estate. Lagging infrastructure can result in future costs for municipalities, higher levels of government, and industries. Planning for the necessary infrastructure is crucial as new buildings and sites are developed.
The RE/MAX report predicts that the demand for industrial property in Canada will continue to grow, attracting both local and global investors. Industrial real estate remains a highly sought-after investment, and the momentum in the market is building.
Sources: RE/MAX 2023 Commercial Real Estate Report