2013 is now officially over, and with it, quite possibly some of the trends that had manifested themselves throughout the year. Last year was characterized by rising long-term interest rates, as well as a boom in office development and pension funds. Looking forward to 2014, The Globe and Mail recently spoke to several industry leaders in order to get a perspective on what the year might look like in terms of real estate trends.
Brad Miller, the president of Jones Lang LaSalle, wanted to see three distinct trends this year:
– Lower interest rates: he believes this is possible, and that cap rates, yields and the REIT market will all stay relatively stable
– Strong leasing demand: Miller thinks that the office sector needs to be observed, with the development of so many properties the preceding year. The retail industry will also see some interesting changes due to American corporations like Target entering the marketplace. In terms of the industrial marketplace, Miller thinks the GTA, Calgary and Vancouver will continue to be strong, but not so much for other areas of the country
– Discipline in the office and condo market: Miller wants developers to be patient with their projects, so as not to create volatility in the market. However, he does believe that he will be disappointed in this case
The Globe and Mail also spoke to David Bowden, the Canadian CEO of Colliers International. He weighed in on what he believes will be the three groups most influential to commercial real estate in 2014:
– Tenants/occupiers: development is increasingly leaning towards unique designs and workplaces, allowing organizations to distinguish their brand. Tenants want to design their workplaces in a manner that allows them to attract and retain the best employees
– Developers: there is a lot of capital to spend, with not as much idea as to what is to be done with it. This will lead to riskier real estate ventures. Bowden predicts an upward trend in mixed-use development centered around transit hubs
– Investors: Bowden expects pressure from investors from the international market in Asia and Europe
The president and CEO of Cushman & Wakefield, Scott Chandler, also analysed potential trends this coming year:
– New downtown office supply: Chandler believes vacancy rates might rise, especially in older, less desirable locations
– Suburban recovery: the suburban office and industrial markets are expected to make a recovery in conjunction with the US economy
– Rising interest rates: a combination of available capital and focused assets will inevitably lead to rising interest rates, according to Chandler.
2014 has only just started, so we will undoubtedly have to wait and see how true the predictions of these industry experts are.
Source: The Globe and Mail
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