Urbanization is now the “new normal” rather than an emerging trend, according to the Emerging Trends in Real Estate 2015 survey, released by PwC and the Urban Land Institute October 28.
The report predicts that this will lead to a rise in mixed-use residential and commercial developments.
“With more people moving into city centres for work and lifestyle purposes, companies and retailers are following them and driving new office and commercial developments,” says the report.
“Urbanization is blurring industry lines as commercial and residential developers discover the opportunities that mixed-use properties bring.”
It says that changing demographics are influencing this merge of residential and commercial development.
Highlights of the report include:
- Suburbia vs. urban: Urbanization is creating greater demand for offices in downtown cores – thanks to younger workers in particular. While the move to the core is more visible, selecting the proper location is critical for any suburban redevelopment, especially around transportation nodes.
- Single-family homes: Industry experts worry about the impact of rising interest rates on the market for single family homes. With a lack of supply of building lots, and many baby boomers opting to stay in their homes rather than sell them, the market for detached single family homes will continue to tighten.
- Condo craze: The continuing urbanization trend and the high cost of single-family homes have fuelled the condo boom in Canada’s major cities. However, the next phase involves young urban condo dwellers starting families and seeking affordable housing. Purpose-built multi-residential rental developments are starting to address this market need.
- Seniors' housing: Canada'saging population means seniors' housing offers attractive opportunities in the future. Vacancy rates are low and returns can be strong. Some investors may partner with firms specializing in facility management.
Broken down by region, the report said that Calgary and Edmonton are the top two real estate markets in Canada, with both scoring well for investment, development and housing. Toronto took third place to push Vancouver took fourth place in this year’s report.
However, Vancouver rated second overall on development prospects, with developers projected to start 17,000 houses a year over the next several years. Vancouver is also expected to lead other cities in growth in 2015 and a steady flow of foreign investment.
To read the full report, click here.
