2012 Global Market report - NAI Global

Toronto, Ontario, Canada
Montreal, Quebec, Canada
Contact
NAI Ashlar Urban
+1 416 205 9222
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
3,855,100
2.7%
$1,632.89
$47,340.29
2.0%
7.5%
1.0%
34.493
Canada, in particular the major urban regions, continues to
look strong relative to the rest of the world. The country
produced over 60,000 new jobs in September pushing the
unemployment rate to its lowest since the recession in
December 2008. This has followed suit in a year that has
produced 300,000 jobs to date. Q4 2011 should shed light
on what to expect for the next fiscal year in both local and
global markets.
Office space occupancy rates in downtown Toronto continue
to improve steadily despite economic uncertainty in the rest
of the world. The success of developed and developing office
buildings such as the PWC Building, 16 York Street and
134 Peter Street (Queen-Richmond Center West) has
proved how strong the market really is as the recent influx
of space has not detracted from absorption rates.
The periphery markets (downtown west & downtown east)
have shared success with the financial core and enjoyed
similar vacancy rates creating a landlord friendly market
across the board. Much of this positive growth can be
attributed to a noticeable push for employers to be located
within the city of Toronto. This should be seen as no
coincidence when looking at the numerous condominium
developments taking place within the city limits. Availability
rates for the downtown office market have continued to
decline and look to settle at just over 8%. Net rents have
followed the strength of the economy and we have seen a
steady increase in rates averaged over the first three quarters.
Toronto continues to be an attractive location for investors.
The combination of low vacancy rates, low lending rates
and solid net rental rates make even low cap rate
purchases make sense. Vacancy rates may show an
increase in the coming months due to the construction of
new office space in and around the core. This should have
little to do with market strength as absorption rates are
expected to continue their steady rise. Expect net rental
rates to continue to increase marginally as well.
As Toronto, and the rest of Canada venture into this time of
economic uncertainty, we should continue to be cautiously
optimistic when investing in the real estate market. A
possibility of a slower pace in the following quarters must
be acknowledged as we are not isolated in today’s global
economy.
Contact
NAI Commercial Montreal
+1 514 866 3333
Country Data
Area (Sq Mi)
GDP Growth
GDP 2011 (US$ B)
GDP/Capita (US$)
Inflation Rate
Unemployment Rate
Interest Rate
Population (Millions)
3,855,100
2.7%
$1,632.89
$47,340.29
2.0%
7.4%
1.0%
34.493
Montreal is the second largest francophone city in the world.
There are nearly 3.6 million inhabitants and 80% of the
business people are bilingual. It is currently ranked first
among Canadian metropolitan regions in investments. It has
seen a drop in the unemployment rate down to 7.4% in
August 2011, as well as the highest increase in monthly job
creation since 2002.
A leader in the new technologies industry, Montreal is home
to such companies as Bombardier Inc. and Airports Council
International. Its enviable reputation in the video game
industry has been further maintained with the establishment
of new companies alongside big names such as Ubisoft, EA
Games and THQ.
Office market data is encouraging. There is a decrease in
the vacancy rate downtown, which is currently at 7.9%
(compared to 9.5% during Q1 2007), and this trend should
continue for the entire agglomeration of Montreal, where the
current rate is 9.7%. Though the market is very active for
spaces 10,000 SF or less in the agglomeration, it is even
more active in the suburbs, where Class A buildings are
scarce and where there is existing demand in certain
sectors, with a vacancy rate of 1.2% in eastern areas of the
South Shore.
Retail sales represent $41 billion and make Montreal the
second largest commercial hub in Canada. The economic
benefits for this sector will have a positive effect on the value
of commercial buildings, which has increased by 22.3%
compared to 2007.
In order to satisfy market demand, industrial buildings
in Montreal require recent structures that comply with
current requirements of height and loading docks. This
obsolescence however does not apply to the suburban
market where industrial buildings are more recent.
Additionally, the credit variation granted to businesses is on
the rise (+5.6% in April 2011), which indicates an active
economy confirmed by the fact that entrepreneurs are
very confident (index of 6.78% in March 2011) about the
evolution of their business.
In conclusion, despite the economic crisis in 2009, real
estate investment in Montreal constitutes a good investment.
The proof being a 22.4% increase in the city’s total real
estate value compared to 2007.
Toronto At A Glance
conversion 1.01 cad = 1 us$ NET RENT/SF/YR US$ NET RENT/SF/YR
low High low High Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
CDN 42.00
CDN 26.00
CDN 15.00
N/A
CDN
CDN
CDN
61.00
34.00
26.00
N/A
$ 41.58
$ 25.74
$ 14.85
N/A
$ 60.40
$ 33.66
$ 25.74
N/A
N/A
5.20%
7.30%
N/A
Class A (Prime)
Class B (Secondary)
IndustrIal
CDN 26.00
CDN 14.00
CDN
CDN
33.00
25.00
$ 25.74
$ 13.86
$ 32.67 10.10%
$ 24.75 11.30%
Bulk Warehouse
Manufacturing
CDN
CDN
4.00
4.00
CDN
CDN
9.50
9.00
$
$
3.96
3.96
$
$
9.41
8.91
N/A
N/A
High Tech/R&D
retaIl
CDN 9.00 CDN 16.00 $ 8.91 $ 15.84 N/A
Downtown
CDN 25.00 CDN 350.00 $ 24.75 $ 346.53 N/A
Neighborhood Service Centers
Community Power Center
CDN 25.00
CDN 23.00
CDN
CDN
40.00
47.00
$ 24.75
$ 22.77
$ 39.60
$ 46.53
N/A
N/A
Regional Malls
Solus Food Stores
CDN 40.00
N/A
CDN 130.00
N/A
$ 39.60
N/A
$ 128.71
N/A
N/A
N/A
deVeloPment land low/acre High/acre low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
N/A N/A N/A N/A
CDN 400,000.00 CDN 1,200,000.00 $ 396,039.60 $ 1,188,118.81
CDN 3,000,000.00 CDN 20,000,000.00 $ 2,970,297.03 $19,801,980.20
Montreal At A Glance
conversion 1.01 cad = 1 us$ NET RENT/SF/YR US$ NET RENT/SF/YR
low High low High Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
CAD 30.00
CAD 25.00
CAD 12.00
CAD 20.00
CAD 16.00
CAD 14.00
CAD
CAD
CAD
CAD
CAD
CAD
40.00
30.00
14.00
22.00
18.00
15.00
$ 29.70
$ 24.75
$ 11.88
$ 19.80
$ 15.84
$ 13.86
$ 39.60
$ 29.70
$ 13.86
$ 21.78
$ 17.82
$ 14.85
N/A
7.80%
9.00%
10.00%
10.30%
11.70%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
CAD
CAD
CAD
4.00
3.75
6.50
CAD
CAD
CAD
6.00
5.25
8.50
$
$
$
3.96
3.71
6.44
$
$
$
5.94
5.20
8.42
4.50%
8.10%
12.00%
Downtown
CAD 65.00 CAD 200.00 $ 64.36 $ 198.02 10.00%
Neighborhood Service Centers CAD 10.00 CAD 25.00 $ 9.90 $ 24.75 15.00%
Community Power Center
Regional Malls
Solus Food Stores
CAD 16.00
CAD 35.00
CAD 20.00
CAD
CAD
CAD
28.00
60.00
26.00
$ 15.84
$ 34.65
$ 19.80
$ 27.72
$ 59.41
$ 25.74
N/A
9.00%
N/A
deVeloPment land low/acre High/acre low/acre High/acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
CAD 240,000.00 CAD 480,000.00 $ 237,623.76 $ 475,247.52
CAD 200,000.00 CAD 400,000.00 $ 198,019.80 $ 396,039.60
CAD 160,000.00 CAD 300,000.00 $ 158,415.84 $ 297,029.70
CAD 160,000.00 CAD 480,000.00 $ 158,415.84 $ 475,247.52
CAD 600,000.00 CAD 3,000,000.00 $ 594,059.41 $ 2,970,297.03
CAD 600,000.00 CAD 3,000,000.00 $ 594,059.41 $ 2,970,297.03
2012 Global Market Report n www.naiglobal.com 47