2019 大多地区市场报告

MARKET SUMMARY

As we move into 2019, Canadian Real GDP growth is expected to grow at a modest level of approximately 1.7%, after a continued decline from 3.0% and 2.0% in 2017 and 2018, respectively. Pressure from Alberta’s oil industry, as well as a slowdown in the housing market and geopolitical trade issues are primarily to blame. This in turn has led the Bank of Canada (BoC) to hold off on increasing interest rates, after five rate hikes since mid-2017, and to take a more dovish tone in regards to future rate hikes. In contrast, and with the exception of British Columbia, Ontario’s economy is expected to lead all provinces, with 2.0% GDP growth in 2019. Although the provincial unemployment rate is low, at 5.4%, Ontario is in the late stages of its economic growth cycle, and the slowdown in the housing market in 2018, due to rising interest rates, mortgage stress testing and the foreign buyers tax in the Greater Toronto Area (GTA), have not helped consumer confidence and retail sales. Furthermore, unemployment in the GTA, at 6.0%, is slightly higher than both the provincial and national averages.

Although it has not been ratified, the new USMCA agreement, formerly NAFTA, is now signed, and as a result some of the tension and uncertainty has eased, specifically in regards to investment planning and exports to the U.S. Despite weak export data in November 2018, Canadian exports as a whole were up 7.4% in the first 10 months of 2018, with Pulp & Paper Products and Machinery & Equipment leading the pack with growth levels at 24.8% and 12.6%, respectively. Further growth of exports is expected in 2019, especially with the Canadian Dollar trading at approximately USD$0.75. Even with the attractive exchange rate for international buyers, the recent arrest of Huawei’s Chief Financial Officer in Vancouver could threaten China’s future imports from Canada, as Chinese Officials threaten retaliatory action on Canada-Chinese relations and trade.

The impact of higher interest rates on household budgets cannot be understated. Higher interest rates and weakening consumer confidence are expected to keep retail sales in Ontario somewhat suppressed, near 4.0% in 2019, down from the 7.7% experienced in 2017. The BoC has indicated that their policy interest rate will need to continue rising over time into a neutral range, however, they will focus on developments in oil markets, the Canadian housing market, and global trade policy in order to guide them. As a result, many economists believe the BoC will be slow to raise rates in the first half of 2019, but do expect up to two interest rate hikes this year. Although this may come as good news to some households that are grappling with rising debt servicing costs, this does raise questions about the economic outlook.

Given this economic backdrop, the office, industrial and retail commercial real estate markets in the GTA continue to perform well and remain well within “landlord” market status. The office market vacancy rate has decreased by 100 basis points (bps) year-over-year to end 2018 at 5.2%, with the average net asking rental rate up 6.5% over the same period, to $19.39/sq. ft. per annum. With exceptionally strong demand, from both finance and tech tenants driving down vacancy and pushing net asking rents up, it is no surprise that landlords and developers are confident about the future performance of the GTA office market. As such, construction activity continues to increase. There is currently almost 11 million SF of office space either under construction or expected to break ground imminently in the GTA, representing over 4.0% of existing inventory. These projects amount to approximately 8.2 million SF downtown, and represent 8.7% of the existing downtown inventory. Downtown vacancy remains tight, at 3.4% at the end of 2018, down 30 bps year-over-year. Furthermore, suburban demand continues to pick up, with suburban vacancy down 80 bps year-over-year, at 6.7%. With demand remaining strong, and new supply limited in the short term, expect rental rates to continue edging up. Downtown net rents are up approximately 20% year-over-year at $33.44/sq. ft. per annum, whereas suburban rents have increased by only 4.3% year-over-year to $17.80/sq. ft. per annum in 2018. It should be noted that meaningful new supply is now 12 to 18 months away, and those tenants who can hold off until the new supply starts coming online, will do so rather than taking space that may not necessarily meet their needs, resulting in a temporary slowdown absorption activity.

The industrial market experienced a 160 bps drop in vacancy year-over year to end 2018 at an exceptionally low 1.5%, with availability down 150 bps over the same period to 2.5%. As a result of strong demand and limited availability and new supply (only 2.7 million SF in 2018), the average net asking rental rate continues to increase, up almost 11% year-over-year, to $7.19/sq. ft. per annum. Low vacancy rates and continued demand from transportation and warehousing users as well as non-traditional users such as cannabis grow operations is driving both demand and increased construction activity. Construction activity is now up to 12.1 million SF, compared to only 4.3 million SF at year-end 2017, and now equates to 1.7% of the current market inventory. As a result of the above, and the fact that there is limited land available for new projects, expect vacancy to remain low and rental rates to continue rising. Rental rate expectations from landlords for new construction projects are increasing even further due to rising construction and land costs. On the retail front, despite the exit of Sears and weakening retail sales as a result of rising debt servicing costs for households, Canada, and the GTA specifically, continue to attract retailer expansions and new retailers. As a result, the retail vacancy rate has decreased by 70 bps year-over-year to 2.5% at the end of 2018, with the average net asking rental rate up by 5.7% year-over-year to $25.50/sq. ft. per annum. The delta between the have’s and have not’s when it comes to retail properties, continues to grow. The landlords that are able to update and renovate their properties in order to attract the best tenants are also attracting the most traffic, whereas the landlords who are not, are being impacted the most.