Demand for commercial real estate remains stable in Winnipeg, according to a new report, with a limited supply of product in all segments of the commercial sector slowly growing.
The RE/MAX Commercial Investor Report 2014 also indicated that the market for multi-unit residential is extremely competitive for purposes of holding, rehabilitating or the conversion into condominiums.
In terms of multi-unit properties, the report indicated that “low inventory levels cannot keep up with the demand ... The majority of these buyers are seasoned owners with large portfolios looking to invest their gains from existing properties.
“In particular, vacant lands have captured the attention of developers looking to build residential condominiums with prices climbing with close to double-digit increases year-over-year.”
According to the report, acquiring infill properties has been easier than grouping small commercial properties together.
“Large residential developers have accumulated enough land to present a 40-plus year land bank for mainly single-family and some new multi-family construction.”
Local REALTORS® said the expansion of multi-family units, such as condominiums offers more choice for buyers.
“The market for well-conceived projects remains strong,” said REALTOR® Garry Hirsch, with location being an important factor as well as effective marketing and pricing.
In its last monthly report, Canada Mortgage and Housing Corporation’s senior market analyst for Winnipeg, Dianne Himbeault, said there has been an elevated pace of construction this year in the multi-family sector, particularly in July and August
The stability of the local commercial market mimics the situation across Western Canada.
“Despite supply challenges,” said Elton Ash, the regional executive vice-president of RE/MAX of Western Canada, “the Western Canadian market continues to hold steady across all products in the commercial sector, with measured increases in some markets supported by foreign investment interest, economic growth due to higher employment, expansion of resource development and a strong desire to increase downtown core density.
“Low interest rates also continue to play a role, as lending flexibility is enabling more investors and buyers to get into the market,” he added.
According to the report, Winnipeg’s single tenant industrial buildings for investment or occupation and multi-unit residential properties are highly coveted and drawing multiple bids, while a new trend in the city has been the redevelopment of older properties to reflect the modern designs of newer buildings.
“Purchasing commercial, industrial and office products has been brisk throughout the first six months of the year,” according to the report. “Ninety-seven sales occurred between January and June 2014, compared to 94 during the same period in 2014, demonstrating an increase of approximately three per cent.”
In the retail sector, demand for storefronts is strongest where adequate parking can be provided to shoppers.
“New developments with large parking fronts and storefronts along major corridors like Kenaston Boulevard and around the regional malls of Polo Park and St. Vital Centre see the greatest level of activity,” according to RE/MAX.
“Between the expansion of existing retailers and additions like Target, Marshall’s and Lowe’s about to enter the market, activity in this sector has seen vacancy rates decrease in power centres to around two per cent.
Another report, Emerging Trends in Real Estate 2014 by PwC, said Winnipeg “is a great market for retail.”
The fall Johnson Report, by Wayne Johnson, concluded construction of power centres over the past few years has added four million square feet of space, or 22 per cent of the city’s retail inventory.
“Purchasing (commercial) property has seen the greatest activity across all sectors,” according to the RE/MAX report, “while leasing has remained relatively flat with only suburban markets experiencing a decrease in overall vacancy with leasing an alternative to fill needs due to a shortage of product.”
It was pointed out in the report that there has been no indication that interest rates will soon rise, so the market will maintain its momentum.