Commercial and Industrial Real Estate in Calgary is one of the most stable types of real estate. Although things have slowed down as a result of the pandemic, the market has been expanding steadily for decades, and the promise is still very present as we approach 2023. Because of this, Calgary's business real estate professionals are both upbeat about the future and still taking things slowly and cautiously.
1.) The development of the "sharing economy"
One tendency that we believe will materialise within the next five to ten years and that we have already begun to notice. This not only makes it simpler for novice buyers to enter our local real estate market, but it also allows businesses like Airbnb and Vrbo to pay more, offer greater returns, or even do both!
2.) An increase in the total expense of construction
Building prices will likely increase slightly as a result of rising construction costs (materials and labour). Some experts have already forecasted that prices will rise on future projects.
While construction is still going on, investors are currently being given returns on their investments of roughly 7-9%, which is not at all terrible! These yields won't be as great after construction is complete, though.
3.) Fewer available retail locations
There will be a lot more innovation in how people buy, which is why it is anticipated that retail spaces will become more scarce and that prices will rise. Within the following few years, this will probably cause Calgary's business real estate prices to increase.
4) Condominiums are replacing conventional workplace buildings.
Over half of all investment properties are anticipated to be condos by 2022 as opposed to commercial or industrial structures. This is because office and industrial buildings generally demand a higher initial investment, as well as the current increased interest among small-time investors who want a higher return.
5) The oil and gas sector slowing down but construction still booming
We’ve already seen a lot of companies in Calgary’s oil and gas sector struggling to keep up with demand or even stay afloat, which is why it won’t be surprising if we see a complete shift in the way commercial buildings are constructed within the next few years.
Costs for construction will rise, but there will be a chance for new kinds of contractors, possibly from other sectors like retirement homes because the market may slow down a little bit until O&G gets back into high speed.
6) The cost of commercial real estate will increase.
We've already seen commercial real estate prices rise in the last 5 years. Investors anticipate that these prices will rise in the future, which makes them very alluring to those seeking to put their money into an investment that offers a high return rate at a low level of risk.
7) More available acreage
Residential areas are now being hybridised with land that was previously only designated for business uses, such as warehouses and storage facilities. This implies that over the next few years, there will likely be a larger demand for residential structures. Because there will be less space accessible on the market, developers and investors may be forced to pay more for the land on which they will construct their buildings, even though this may not definitely result in an increase in overall prices.
8) An increase in investment interest in multi-family housing,
There hasn't been much of a market for business and industrial investment properties so far. Since there has been less demand lately, according to our commercial real estate experts, novice investors have begun searching for alternatives. Enter multi-unit residential buildings.
These are frequently quite affordable and offer a consistent stream of rental revenue with little work. They are more appealing than ever thanks to the current real estate market, which has low demand for business properties and high demand for residential buildings. The average price per unit was $200,000 in 2017 and is expected to rise by an estimated 6% annually from 2018 to 2022.
9) More stringent regulations than ever before
When it comes to Airbnb, this is particularly accurate. To reduce the availability of short-term rentals, many North American cities, including Toronto, have imposed stringent regulations on Airbnb. In order to increase the profitability of business buildings by raising rental prices and lowering vacancy rates, we anticipate Calgary to follow suit.