Commercial real estate investment soars to record heights

WATERLOO REGION — Commercial real estate investment is expected to hit a record of $58.5 billion in 2022, up from last year’s $57.9 billion, according to CBRE’s annual report on market trends.

As the pandemic slowly recedes, the vacancy rate for downtown commercial real estate has dropped two percentage points, available industrial space remains almost non-existent and the region’s booming multi-residential sector will remain attractive to investors from outside the area.

The caution of the past two years will be replaced by more and bigger deals for office space, “particularly from technology firms as the market lands on more stable footing in the year ahead,” the CBRE report says.

“Turnkey spaces and new supply delivered in the last development cycle will begin to pick up traction as companies and employees place emphasis on the need for best-in-class product and amenities for their eventual return to the office.”

The booming real estate market is mirrored in the industrial sector, where the vacancy rate is less than one per cent. Industrial land now sells for nearly $1 million an acre.

“Waterloo Region effectively ran out of industrial inventory in 2021 as users from the GTA and Western Canada flocked to the region,” the report says.

“Demand for industrial assets has continued to push pricing to new highs and isn’t anticipated to slow either.”

Long delays for planning approvals and servicing could push industrial land prices higher in the years ahead, says the report.

More to come