Commercial real estate set to pick up, TD says
Commercial real estate construction will likely pick up in 2013 and 2014, TD Economics said in a study released Thursday.
After a strong showing last year – with $21 billion in transactions – TD says it expects volume to moderate this year.
The wild card over the second half will be consumer and business confidence, given worries about Europe’s debt crisis and slowing growth in the U.S. and China.
But on the positive side are low interest rates, good corporate profit growth of 4.3 per cent this year and the fact that many firms have healthy reserves of cash.
TD predicts activity in Calgary and Edmonton should continue to be strong the rest of this year and next, given the demand for high-quality office space still outpaces supply and there are only a handful of office projects currently under construction in both cities.
It foresees industrial real estate demand in Alberta picking up next year, given its assumption crude oil prices will return to $90 US at the beginning of 2013.
Toronto is also experiencing tight conditions, it says, because of renovations in the financial core and increased demand for retail space associated with condos.
Several projects under construction will bring four million square feet of commercial space to the Toronto market over the next few years.