Emerging Trends in Real Estate 2012 - Urban Land Institute

Chapter 5: Emerging Trends in Canada
Exhibit 5-19
Prospects for Niche and Multiuse Property Types
in 2012
Urban Mixed-Use Properties
Infrastructure
Mixed-Use Town Centers
Medical Office
Self-Storage Facilities
Master-Planned Communities
Data Centers
Lifestyle/Entertainment Retail
Master-Planned Resorts
Resort Hotels
Investment Prospects
6.46
6.35
6.33
5.92
5.41
5.25
5.03
5.00
4.03
3.84
Development Prospects
rents, and level demand. Vacancy rates settle in the mid- to
high single digits across office and industrial markets, and even
lower in retail and apartments. Development remains controlled
without the threat of overbuilding unless buyer demand for
condominiums declines dramatically in Toronto, Vancouver, and
Montreal. For investment, survey respondents favor apartments,
downtown offices, and neighborhood shopping centers over
suburban office space and hotels (exhibit 5-18). On the development
front, “everything looks stable; rents are about the same as
ten years ago, and all the caution about the world debt crisis will
keep construction under control. It’s more of the same.”
Apartments. The multifamily residential sector will stay tight as
continuing immigrant flows sustain demand in the major cities.
Even if job growth declines and homebuying cools, apartments
should be “a safe haven.” When people have less, they rent.
Increasing numbers of younger adults delay buying houses; they
simply cannot afford them after recent price spikes. Aging demographics
also favor more apartment demand: empty nesters and
seniors move out of suburban homes into smaller, easier-to-maintain
units with urban conveniences. Apartment developers can
readily obtain construction financing, but thin margins dampen
interest: renters look for higher-finish condo-quality buildings,
Exhibit 5-20
Canadian Apartments—Moderate Income
Urban Mixed-Use Properties
Infrastructure
Mixed-Use Town Centers
Medical Office
Self-Storage Facilities
Master-Planned Communities
6.64
6.58
6.29
5.83
5.56
5.09
2012 Prospects Rating Ranking
Investment Prospects 6.31 Modestly Good 1st
Development Prospects 5.33 Fair 3rd
Buy
51.7%
Expected Capitalization Rate, December 2012 5.7%
Source: Emerging Trends in Real Estate 2012 survey.
Note: Based on Canadian respondents only.
Hold
39.7%
Sell
8.6%
Data Centers
Lifestyle/Entertainment Retail
Master-Planned Resorts
4.91
4.88
3.55
Exhibit 5-21
Canadian Apartments—High Income
2012 Prospects Rating Ranking
Resort Hotels
3.52
Investment Prospects 5.71 Modestly Good 5th
Development Prospects 5.07 Fair 6th
1
abysmal
5
fair
9
excellent
Buy
29.8%
Hold
52.6%
Sell
17.5%
Expected Capitalization Rate, December 2012 5.4%
Source: Emerging Trends in Real Estate 2012 survey.
Note: Based on Canadian respondents only.
Source: Emerging Trends in Real Estate 2012 survey.
Note: Based on Canadian respondents only.
Emerging Trends in Real Estate ® 2012
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