- Canadian job market continued to strengthen in Q3 after
historic losses resulting from COVID-19's first wave
- Assets with financially stable tenants on longer-term leases to
continue to attract investors in the remainder of 2020
- Consumer and investor confidence expected to return at some
point during 2021 assuming some form of resolution of the pandemic
and a subsequent improvement in the economic outlook
Morguard Canadian Economic Outlook & Market
Fundamentals
Third Quarter Update 2020
MISSISSAUGA, ON, Nov. 18, 2020 /CNW/ - During the third quarter of
2020, the multi-suite residential and industrial sectors of
Canada's commercial real estate
remained resilient despite the economic slowdown resulting from the
pandemic. Meanwhile, the office and retail segments witnessed
increased vacancy levels in most Canadian cities as restrictions in
response to a second wave of COVID-19 kept Canadians working and
shopping from home, according to the latest Canadian Economic
Outlook and Market Fundamentals Report issued by Morguard
Corporation ("Morguard") (TSX: MRC).
"The steady performance of multi-suite residential and
industrial assets during the pandemic continued to attract
investors during the third quarter of 2020," said Keith Reading, Director, Research at Morguard.
"Canada's job market continued to recoup after the losses seen in
the spring, however, office and retail assets are anticipated to
underperform in the approaching atypical holiday season. Entering
2021, consumer and investor confidence are anticipated to return,
aligned with further developments regarding a COVID-19 vaccine or
more effective treatments."
Commercial Real Estate
Demand for multi-suite
residential assets outperformed the office and retail sectors in
the third quarter of 2020, continuing with the trend seen since
early 2020. The segment's stable performance is in part attributed
to the uncertainty brought on by the pandemic regarding job losses,
as many Canadians who had planned to purchase a home in 2020, have
decided to continue renting until the economic landscape becomes
clearer. For investors, multi-suite residential assets remained a
safe, long-term investment. Looking ahead, investment demand for
multi-suite residential assets will continue to outpace the supply
of available properties in major centres such as Toronto, Montreal and Vancouver.
Demand for industrial investment properties also exceeded supply
during the third quarter of 2020. More than $1.0 billion in industrial property sales was
tallied in the country's major markets combined. Investment sales
have exceeded $1.0 billion mark in
every quarter dating back to the first quarter of 2014.
In the office segment, downtown vacancy rose sharply in most
Canadian cities in the third quarter of 2020 with a spike in
sublease availability and a subsequent increase in supply. Tenants
were pushed to reduce their footprints in the core of the country's
most expensive markets due to heightened economic and financial
uncertainty. Investors applied caution when purchasing office
assets and focused on stable investments with financially stable
tenants on longer-term leases as a more forward-looking
approach.
Looking ahead, institutional investors are expected to target
prime properties in Toronto,
Montreal and Vancouver most aggressively, which will ensure
property values hold firm. The Canadian commercial investment
property capital flow is anticipated to remain muted over the near
term, barring some form of resolution of the COVID-19 pandemic and
a subsequent improvement in the economic outlook.
Economic Factors
The proportion of Canadians
collecting the Canada Emergency
Response Benefit, Canada Emergency
Student Benefit or Employment Insurance fell to 13.5 per cent in
September, down from 16.1 per cent in August, depicting a moderate
improvement in Canada's economy,
combined with a bounce back in the job market.
During the third quarter, the Bank of Canada continued to adapt to the economy's
evolving conditions and responded to support Canadian businesses
and borrowers. In the same period, global equity markets
strengthened as a result of an improved global economic outlook,
however, an increase in the number of COVID-19 cases across the
country may impact the global equity market forecast for the near
term.
The Consumer Price Index (CPI) increased modestly during the
third quarter, due largely to subdued domestic services demand.
Inflation levels are anticipated to remain muted over the next few
months, as a result of excess economic capacity and an overall
weakened labour market.
Retail sales grew at a moderate pace in the third quarter after
a strong rebound from the losses as a result of the COVID-19
pandemic closures. Retail sales increased by 2.6 per cent
year-over-year as of July. Except for gasoline and clothing, sales
were up for all spending sub-categories.
The third quarter update of the 2020 Economic Outlook and Market
Fundamentals Research Report, released today by Morguard, provides
a detailed analysis of the 2020 real estate investment trends to
watch in Canada. The full report
is available at morguard.com/research.
About Morguard Corporation
Morguard Corporation is a
major North American real estate and property management company.
It has extensive retail, office, industrial, hotel and residential
holdings owned directly and through its investment in Morguard Real
Estate Investment Trust and Morguard North American Residential
REIT. Morguard also provides real estate management services
to institutional and other investors. Morguard's owned and
managed portfolio of assets is valued at $19.4 billion. Please visit
http://www.morguard.com or follow us on LinkedIn.
Forward Looking Statement Disclaimer
Statements
contained herein that are not based on historical or current fact,
including without limitation statements containing the words
"anticipates," "believes," "may," "continue," "estimate," "expects"
and "will" and words of similar expression, constitute
"forward-looking statements." Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause the actual results, events or developments to be
materially different from any future results, events or
developments expressed or implied by such forward-looking
statements. Such factors include, among others, the following:
general economic and business conditions, both nationally and
regionally; changes in business strategy; financing risk; existing
governmental regulations and changes in, or the failure to comply
with, governmental regulations; liability and other claims
asserted; and other factors. Given these uncertainties, readers are
cautioned not to place undue reliance on such forward-looking
statements. The Publisher does not assume the obligation to update
or revise any forward-looking statements.
SOURCE Morguard Corporation