Sentiment on Canada’s overall real estate industry is optimistic, though key trends will likely reshape the business, says the annual real estate report from PwC and the Urban Land Institute, Emerging Trends in Real Estate 2022.
The report is based on a survey of investors, fund managers and developers, among others.
Respondents are monitoring key trends such as shifts in the workplace, rising costs and competition, and the increasing significance of environmental, social and governance (ESG) factors, the report said.
“ESG, digital accelerations and workforce shifts are all mega-trends that will continue to have a transformative impact on the industry,” said Richard Joy, executive director of the Urban Land Institute Toronto, in a release. “Working together to find creative solutions to these challenges will enable real estate leaders to shape the future and uncover new opportunities.”
In addition to addressing key ESG matters such as sustainability and climate change, as well as governance issues such as diversity and inclusion, many interviewees said supporting the growth of affordable housing options is an important social aspect of ESG performance.
ESG is also seen as part of a long-term strategy to greater value.
“ESG performance clearly will be a rising factor in long-term value creation for the real estate industry, whether by attracting premium rents and pricing, accessing lower-cost financing, increasing efficiencies or reducing risks,” the report said.
Among the best bets for investment and development is warehousing and fulfillment, reflecting the growth of e-commerce. An emerging trend in the space is the blurring of warehousing and fulfillment with retail. “This is growing in prevalence as industrial locations are positioned closer to the end-customer to facilitate last-mile delivery,” the release said.
Other properties with good investment and development prospects are rental housing and medical offices.
“With the Canadian government continuing to work with pharmaceutical companies on expanding that industry in Canada to ensure supplies of products like vaccines, the biotechnology and life sciences sector is a growing opportunity for the real estate industry,” the report said.
For full details, read the emerging trends in real estate report.