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Commercial Real Estate Sector Thrives in Waterloo

Commercial Real Estate Sector Thrives in Waterloo

Commercial Real Estate Sector Thrives in Waterloo
July 18
16:42 2016

Waterloo’s Commercial Real Estate sector has not only bounced back from South-western Ontario’s recent economic challenges but continues to draw investors. Evidence is everywhere.

The Real Estate Investment Network (REIN) has dubbed Waterloo the “Economic Alberta of Ontario” and ranked the Waterloo region among the Top 10 Canadian Investment Cities.

REIN’s Top Ontario Investment Towns 2014 report states “It is easy for an investor to see the high rental income in a city like Waterloo can offer, what with the high levels of immigration and the constant influx of students – and that is why the city remains on our list of Top Investment Towns.”

The Conference Board of Canada’s September 2014 report, City Magnets III: Benchmarking the Attractiveness of 50 Canadian Cities states: “Waterloo shines as one of the top cities for migrants, thanks to its well-earned reputation for innovation and education. The city ranked first in education, second in innovation, and third in the economy category.”

According to the numbers, CBRE Waterloo Region Industrial Market View Q3 2014 indicates that: the region recorded a modest 35,713 square feet of positive absorption region wide, which brought the Year to Date absorption to 207,659 square feet. Construction levels throughout the region increased to their highest levels since Q1 2010 with 594,817 square feet currently being built.

J. Peter Whatmore, Senior Vice President Southwestern Ontario, CBRE Limited (cbre.ca) says “Waterloo region continues to be recognized by investors as one of the strong up and coming markets in Canada due to the strength and diversity of the Tech sector and from a logistics prospective its close proximity to the Toronto market.”

Cushman & Wakefield Waterloo Region Q3 2014 Market Beat Office Snapshot suggests: The Region continues to experience growth overall, but especially in the Downtown cores. This positive trend is expected to continue as the local population is expected to increase from 550,000 residents in 2014 to 729,000 by 2031 … The overall vacancy rate for Waterloo Region has decreased to 14.1 per cent over last quarter’s 15 per cent. This is due to122,360 square feet of leasing activity this quarter across Kitchener and Waterloo, as well as sale transactions moving some space into occupiers’ hands.

“Any time you have positive growth you have a positive outlook in real estate economic, and social growth,” says Mike Polzl, President and Broker of Record, Cushman Wakefield (cushwakewr.com). “There has been a lot of retail development in the past couple of years supported by the large number of residential housing growth. It ranges from small mom and pop shops to large developments along Ira Needles Boulevard. The boardwalk project shows the consumer demand.”

Capitalization dates for Downtown Office and Industrial remain above the national average.

“Demand is high with national averages around 5 per cent and with local Capitalization Rates of 6.5 per cent it’s driving investment to the area,” says Ted Davis, Broker of Record at Avison Young (avisonyoung.com).

“Capitalization Rates are coming down elsewhere and investors are looking for a well-developed area, a well-trained and available workforce, post-secondary institutions, and Waterloo has it all plus a better return which drives investment. As inventory becomes scarce in the GTHA, the next development area is in the Waterloo-Wellington Region. It’s a bit of a perfect storm.”

For more on Commercial Real Estate and Development, visit any of the above mentioned brokers or the City of Waterloo, Economic Development pages at www.wearewaterloo.ca.


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