Canadian commercial real estate snapshot via Crea ai image

Canadian Commerial Real Estate Snapshot

Canadian Commerial Real Estate Snapshot 

Canadian Commerial Real Estate Snapshot  – Fourth Quarter 2023 via CREA

 

Key Points:

 

“Non residential building permits were down 3% from the same three-month period a year ago, and down more than 13% from the three months prior, with sharp reductions in British Columbia, Ontario, New Brunswick, and Newfoundland and Labrador.

 

Tighter financial conditions and a weakening economy could further dampen non-residential construction intentions in 2024.

 

As material and labour costs rise and continue to increase, the financial feasibility of new projects could be negatively impacted leading to a further reduction in the number of permits issued.

 

The labour market is showing signs of easing. Most firms do not feel the need to add new staff and are experiencing less-intense labour shortages than a year ago. However, on average, wage growth is expected to be higher than normal over the next 12 months, mainly a result of cost-of-living adjustments rather than productivity gains.

 

The Bank of Canada has also stated that higher than expected wage growth could keep them from cutting rates in the near-term.

 

Canadian housing starts fell more than 4.5% in the fourth quarter of 2023, compared to the third quarter, and was down more than 5.5% from the fourth quarter in 2022.

 

Affordability issues around the country mean the number of new housing starts need to find a way to stay high to meet demand, but higher interest rates, material, and labour costs are hampering the development of new homes.

 

The government has announced new measures to incentivize the construction of new rental housing, including removing GST from the construction of new rental apartments and requiring municipalities to modernize exclusionary zoning policies to access the housing accelerator fund. Federal government announces a pledge of 6 Billion housing in new infrastructure fund.

 

Canada needs to fill 12,000 skilled labour vacancies per year in the residential construction industry over the next decade to meet our country’s housing needs, and non-traditional sources of construction labour will play a crucial role in filling those vacancies.

 

While Gross Domestic Product (GDP) growth has been flat since the spring of 2023, Real GDP per Capita has been stagnating since early 2020, as increases in real output has not kept up with population growth. Recent research highlighted by many financial commentators suggests Real GDP per Capita will continue to trend lower for the remainder of the decade in Canada.

 

Uncertainty about what pace inflation may decline over 2024 could keep interest rates higher for longer. In their latest Monetary Policy Report, the Bank of Canada forecasted the Canadian economy is only set to grow 0.8% in 2024, compared to 1% last year, before increasing to 2.4% in 2025.”

 

Read the full report below:

 

Read the latest Canadian statistics housing starts

Real the latest Montreal market stats

Learn about Montreal neighborhoods

Bonnie Meisels
buymontrealrealestate@gmail.com
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