As one of the leading global real estate franchisors, RE/MAX, LLC is a subsidiary of RE/MAX Holdings (NYSE: RMAX) with more than 140,000 agents in almost 9,000 offices with a presence in more than 110 countries and territories. RE/MAX Canada refers to RE/MAX of Western Canada (1998), LLC, RE/MAX Ontario-Atlantic Canada, Inc., and RE/MAX Promotions, Inc., each of which are affiliates of RE/MAX, LLC. Nobody in the world sells more real estate than RE/MAX, as measured by residential transaction sides. RE/MAX was founded in 1973 by Dave and Gail Liniger, with an innovative, entrepreneurial culture affording its agents and franchisees the flexibility to operate their businesses with great independence. RE/MAX agents have lived, worked and served in their local communities for decades, raising millions of dollars every year for Children’s Miracle Network Hospitals® and other charities. To learn more about RE/MAX, to search home listings or find an agent in your community, please visit remax.ca. For the latest news from RE/MAX Canada, please visit blog.remax.ca.
This report includes "forward-looking statements" within the meaning of the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "believe," "intend," "expect," "estimate," "plan," "outlook," "project," and other similar words and expressions that predict or indicate future events or trends that are not statements of historical matters. These forward-looking statements include statements regarding housing market conditions and the Company's results of operations, performance and growth. Forward-looking statements should not be read as guarantees of future performance or results. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. These risks and uncertainties include (1) the global COVID-19 pandemic, which has impacted the Company and continues to pose significant and widespread risks to the Company’s business, the Company’s ability to successfully close the anticipated reacquisition and to integrate the reacquired regions into its business, (3) changes in the real estate market or interest rates and availability of financing, (4) changes in business and economic activity in general, (5) the Company’s ability to attract and retain quality franchisees, (6) the Company’s franchisees’ ability to recruit and retain real estate agents and mortgage loan originators, (7) changes in laws and regulations, (8) the Company’s ability to enhance, market, and protect the RE/MAX and Motto Mortgage brands, (9) the Company’s ability to implement its technology initiatives, and (10) fluctuations in foreign currency exchange rates, and those risks and uncertainties described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) and similar disclosures in subsequent periodic and current reports filed with the SEC, which are available on the investor relations page of the Company’s website at www.remax.com and on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made. Except as required by law, the Company does not intend, and undertakes no duty, to update this information to reflect future events or circumstances.
Sign Up for the Newsletter
About the RE/MAX Network
Regional market insights
• Newfoundland-Labrador forecast to lead Atlantic Canada in GDP growth in 2023 as capital spending ramps up in the province.
• Industrial inventory shortage in Ontario may spill over into Newfoundland-Labrador as potential buyers and tenants’ express interest in the St. John’s industrial product.
• After moving en masse to suburbs, the question is whether there is potential for a return to the downtown core for corporate offices.
St. John’s, Mount Pearl & Paradise
Click to read more
• Commercial office vacancies hovering at 18 to 20 per cent in the core, and shrinking footprints of existing corporate offices, have prompted a seismic shift in the office market. While not all office buildings are well-suited for residential conversion, the city’s abundance of heritage buildings offer a unique opportunity to preserve history and provide homeownership opportunities in prime real estate on Halifax’s waterfront.
• Vacancy rates under one per cent are behind much of the push for purpose-built rentals in Halifax and the surrounding areas, with not enough product to accommodate the city’s rapidly growing population. With the population approaching 500,000, the need for housing has never been greater, yet the estimated 24,000 units planned in 10 to 15 buildings throughout the Halifax Regional Municipality, are on hold, with developers waiting for more favourable conditions to present.
• The city’s malls continue to fare well, with few vacancies despite higher lease rates. Retailers are reducing their footprints in area malls, given robust on-line shopping sales while management is looking to enhance the shopping experience by adding more restaurants, gyms, and in some cases, higher-end grocery stores. Some landlords have revamped large parking lots, adding office towers and a residential element to complement existing retail.
halifax
Click to read more
• Industrial sales and leasing remain tightest, with demand greatest for manufacturing, warehousing and distribution facilities. While availability rates edged up year-over-year in Ottawa, according to a recent report by Altus Group, vacancy rates remain stubbornly low, hovering at just over one per cent.
• Land sales have soared in 2023 with industrial now fetching $1 million an acre (and has moved for as high as $1.2 million an acre in recent months).
• Opportunities currently exist within Ottawa for commercial investors, many of whom are attracted to the market because of its reasonable price point. Small office building, industrial buildings, and residential land, particularly product on the greenbelt, all represent a solid investment strategy.
Ottawa
Click to read more
• Industrial remains by far the strongest sector, with vacancy rates still under one per cent. Lack of inventory continues to hamper activity in the industrial sector, with both sales and leasing opportunities few and far between.
• Land with approvals in place is most sought after. Industrial, retail, and residential apartments in all sizes – multi-plex to high-rise – all represent opportunity but finding land at a decent price is challenging, especially after taking into consideration the additional cost of construction, project management, and development charges.
• Shopping centres and malls in and around the 416-area code continue to innovate, with residential condominium developments currently under construction or proposed. Construction is already underway at the Promenade Mall where residential development will provide a captive audience for the site’s retail presence.
greater Toronto area
Click to read more
• Manufacturing facilities are most sought-after in Hamilton, representing approximately 50 to 60 per cent of all sales/leasing activity, followed by warehousing and distribution sites. Inventory remains tight throughout the area, with new industrial parks in and around the Hamilton Airport now fully leased.
• Ownership of both malls and plazas continue to find exceptional value in their parking lots, submitting proposals to convert underutilized areas into high-density residential/commercial developments that promote live-work-shop communities.
• While some improvement has been noted in demand for urban/suburban office space, the work from home phenomenon has had a significant impact on the city’s commercial office space.
hamilton
Click to read more
• Industrial continues to lead the way, with lease rates and sale prices rising substantially over year-ago levels. Vacancy rates remain at historically low levels, with solid demand for warehousing and distribution space prompting an abundance of new construction in the region.
• Land sales remain solid in both the residential and industrial segment, while the pace of activity has slowed somewhat from year-ago levels. The challenge to date has been the development process, which is cumbersome and slow moving.
• Office leasing and sales remain soft, with the effects of the pandemic still lingering. The downtown core has been particularly hard hit, with availability rates now hovering over 20 per cent. Older B and C class buildings will have to undergo major upgrades to attract tenants, with landlords offering inducements and step leases to sweeten the deal.
London-
St. Thomas
Click to read more
• Industrial remains at the forefront in 2023, leading development citywide, while the multi-family sector has reignited buyer attention this year in large part due to attractive CMHC financing.
• Fewer investors have been active in the industrial market this year, with end users picking up the slack. Newer warehousing and distribution space remains most sought-after, generating competition, with lease rates rising year-over-year and prompting some to consider older product in secondary markets.
• The office sector remains soft in the downtown core, prompting some conversions, but the suburban market has been robust.
• The retail sector experiences solid demand, demonstrated by tighter vacancy rates. Strip malls and shopping plazas remain a coveted asset.
winnipeg
Click to read more
• Industrial sales are the driving force in the commercial sector, with REITs and institutional investors vying against end users. Lack of supply continues to hamper activity, prompting some end users to purchaser older, existing buildings and rehabilitate or tear down, according to their requirements.
• Retail in suburban neighbourhoods has also soared, with limited inventory contributing to skyrocketing rates. Retail leases are hovering between $25 to $30 per square foot, with common costs amounting to another $12 to 15 per square foot. Demand is so strong that landlords feel no pressure to negotiate, especially for newer, up and coming areas, where product is few and far between.
• Office leasing on the other hand has faced some challenges in the downtown core with key players such as banks and corporate offices leaving former A class space for new A class office buildings on the riverfront. The new construction has drawn so many tenants from neighbouring offices that an estimated 50 per cent of B class buildings are vacant.
saskatoon
Click to read more
• Industrial sales and leasing are at the forefront for most, with vacancy rates at less than one per cent. Developers are scrambling to meet demand but with little or no serviced land left in the city, industrial continues to be pushed to Regina’s peripheral areas.
• Regina’s housing shortage, coupled with strong population growth, has accelerated the development of purpose-built rentals in Regina, with some spillover into neighbouring Weyburn and Estevan.
• Farmland remains buoyant, with record sales occurring as large farm operations continue to expand into adjacent properties.
regina
Click to read more
• Edmonton’s ideally positioned for strong investment activity in 2023 as the city post’s one of its strongest first quarters in recent history.
• Out-of-province investors increasingly drawn to the city’s affordable price point for land, young, educated labour force, and favourable provincial tax structure and incentive programs.
• While the Industrial sector leads the way, other asset classes are experiencing an uptick in activity this year.
edmonton
Click to read more
• Investors from British Columbia and Ontario are exceptionally active in Calgary’s commercial market, driving demand for industrial and multi-unit residential product.
• Calgary has bucked the national trend, with availability rates in both industrial and office leasing trending downward in the first quarter of 2023.
• With a growing tech presence and 10 commercial buildings slated to undergo conversion to residential, excitement is building in Calgary’s downtown core, with demand for retail and restaurant space on the upswing.
Calgary
Click to read more
• Industrial remains the top performing sector in Greater Vancouver with vacancy rates under one per cent. Consistent demand exists for warehousing and distribution space throughout the GVA, with conditionals tightest in suburban areas outside Vancouver Proper in Richmond, Delta, Burnaby and Langley.
• Area malls are rethinking the value proposition of their expansive parking lots and replacing them with multi-family buildings and commercial office space. Multiple malls and shopping centres are in various stages of development, with many offering a mix of multi-family, office, retail and restaurants.
• Housing continues to be Vancouver’s greatest challenge and residential builders and developers can’t get their shovels in the ground fast enough, but red tape and delays from application to approvals and development fees are dragging out the development process.
Greater vancouver
Click to read more
EXPERT EVALUATION
A shortage of inventory continues to put upward pressure on commercial values and lease rates, especially within the industrial sector. Prices remain buoyant as a result with further escalation anticipated as momentum improves heading into the latter half of the year.
Christopher Alexander, President
RE/MAX Canada
Although activity has come off peak levels reported in the first quarter of 2022, demand for commercial real estate remains relatively healthy in most major centres. Several markets experienced strong activity in the first quarter, despite challenging market conditions.
Commercial activity holds steady in Q1 2023 as markets continue to grapple with higher borrowing costs and inflationary pressures
While caution characterized investment activity in the first three months of 2023, sentiment is shifting in Canada’s commercial sector. Positive indicators have emerged, led by rising demand and the re-entry of major players to the market, suggesting a significant upswing in demand may be in the cards for the back half of the year.
RE/MAX examined 12 commercial real estate markets from Greater Vancouver to Newfoundland-Labrador in the first quarter of 2023 and found considerable resilience despite a commercial real estate landscape that continues to evolve post-pandemic.
real estate report
Click to Follow:
2023
With both property and lease values climbing, investors and end users in British Columbia and Ontario have extended their search perimeter for distribution and warehousing facilities to neighbouring provinces with more affordable pricing.
A spillover of demand from these provinces and key markets have bolstered sales of industrial product in Edmonton, Calgary, Regina, Saskatoon, London-St. Thomas, Halifax and St. John’s.
While demand has softened from peak levels reported in 2022 in most Canadian markets, inventory levels remain extraordinarily low, given the headwinds the industry has encountered.
Industrial real estate continued to outperform almost every other asset class, with all markets reporting strong sales and lease activity.
Approvals in place have been a critical component in bringing deals to fruition, given the lengthy approval process that exists in most markets.
Red tape and development fees have been a barrier in all types of new construction.
Vendor take-back mortgages have also re-emerged in several markets as sellers work with buyers to close the deal.
Land sales remain solid, despite higher interest rates and construction costs, with acreage zoned industrial, multi-family and retail most sought-after in major Canadian centres.
Almost 92 per cent of markets syrveyes (11 out of 12) have reported solid activity in retail nodes and shopping centres.
From storefront on major arteries to strip plazas and shopping malls, the bricks and mortar experience is resonating with today’s consumers. Investment dollars have been pouring into major shopping malls across the country as landlords seek to enhance the shopping experience.
Landlords are also cashing in the live-work-shop phenomenon, with the number of residential applications on commercially zoned property growing across the country.
Retail real estate activity continues to be surprisingly robust, given the growth of online sales in recent years.
The trend is especially prominent in downtown urban centres.
As sublet space expands and lease renewals involve reduced space requirements, management is reconsidering their options.
While reducing the physical footprint to reduce costs is top of mind with some companies, others are looking to incentivize employees return by creating a more social component within the workplace.
The office sector continues to struggle in markets across the country as employers wrestle with hybrid work models.
Conversions have been key to healthy, vibrant downtown cores. 50 per cent of markets surveyed (6 out of 12) have reported conversion activity in this growing segment.
There are a growing number of buildings targeted for conversion in various stages of planning and development in Calgary, Halifax, Ottawa, London, Toronto and Winnipeg.
Although not all buildings will be ideally suited for retrofit, some major centres are providing incentives to encourage conversion to residential.
The Repurposing of commercial office space into residential is either planned or already underway in major Canadian centres.
In key centres, RE/MAX brokers have noted that buyers and sellers have made a concerted effort to transact. In an analysis of closed transactions in the Greater Toronto Area in Q1 2023, for example, the number of vendor take-back mortgages (VTBs) as a percentage of total sales over $2 million rose substantially over year-ago levels, climbing to 9.55 per cent, up from 5.82 per cent in Q1 2022, with VTBs now representing almost one in 10 transactions*. In Western Canada, investors took advantage of attractive financing for construction of purpose-built rentals through Canada Mortgage and Housing Corp. (CMHC), while those interested in existing buildings cut deals that allowed for the assumption of CMHC mortgage financing at lower interest rates.
Real estate investment trusts (REITs) are now slowly venturing back into the market, driving demand for industrial, multi-family, retail and, to a lesser degree, office product. Conditions are ripe for investment, particularly for multi-family properties, given growing demand for housing in markets across the country. According to Statistics Canada, the nation’s population climbed to just short of 40 million in January of 2023, the highest annual population growth on record. The increase has served to further exacerbate the country’s already critical housing shortage, which showed vacancy rates for purpose-built rentals fell to 1.9 per cent nationally and condominium rentals dropped to 1.6 per cent, according to CMHC. Rental rates have risen in response to tight inventories in markets across the country, with double-digit increases noted year-over-year in most markets. The trend has bolstered already strong demand for existing multi-family, but product is scarce.
RE/MAX found that for some Class B and C buildings, the answer may lie in repurposing their buildings, as demand for residential housing reaches critical levels. Although not all buildings will be ideally suited for retrofit, some major centres are providing incentives to encourage conversion to residential. Calgary introduced the Downtown Calgary Development Incentive Plan in 2021 which provides a $75-per-square-foot subsidy to developers for converting offices to residential, with 10 buildings approved to date. By way of conversion, more than 1,200 new homes will be created and approximately one million square feet of commercial office space will be eliminated, breathing new life into Calgary’s downtown core. There are a growing number of buildings targeted for conversion in various stages of planning and development in Halifax, Ottawa, London, Toronto and Winnipeg.
“Commercial office markets are experiencing a transformational shift in the aftermath of the pandemic,” says Alexander. “Downtown cores were virtually decimated by Covid restrictions and have yet to come back to life in many Canadian centres. The conversion programs now underway ensure that our city centres remain vibrant in the future, restoring vital foot traffic that is the lifeblood of the country’s core urban areas. The retrofit and renovation activity not only brings desperately needed residential product online, but it also supports the surrounding retail shops and restaurants, transit systems, and the overall health of our downtown neighbourhoods.”
The most significant holdback is the red tape that currently exists in regard to zoning amendments, applications and approvals at local and provincial government levels. With housing supply at critical levels and an immigration commitment of at least 800,000 new Canadians over the next two years, governments must be prepared to act quickly.
*Compiled from data available from RealTrack.
Elton Ash, Executive Vice-President
RE/MAX Canada
EXPERT EVALUATION
We need partners in our city planning offices to streamline the applications and approvals process in a timely manner – months, not years – to bring these properties to market.
Population and GDP growth will continue to be a strong driver bolstering urban expansion in cities across the country. Naturally, a growing population base attracts new business and services, and we are seeing that translate into solid demand for most types of commercial real estate across the board.
RE/MAX also found that lower inventory levels, across the board and in almost every asset class, have hampered activity to some extent. In the first three months of the year, the shortages sparked competition, particularly in the industrial segment. Once again, supply plays a critical role and availability remains tight for quality product. Without an influx of available listings, this trend is expected to continue through to year-end, assuming supporting positive fundamentals remain in place.
“Overall, a number of encouraging indicators characterize Canada’s commercial real estate market,” says Alexander. “Renewed demand for housing has sparked builders and developers’ interest, with projects placed on hold in the latter half of 2022 once again on the table. Employment growth may support the recovery of the country’s most lacklustre segment, although a changed culture favouring work-life balance suggests a return to pre-pandemic occupancy in the office sector is unlikely. On the retail side, consumer gravitation back to bricks and mortar stores after some post-pandemic online fatigue will bode well for business, while industrial will remain the sweetheart investment, drawing suitors from both a local and global audience. The momentum is building, with some pent-up demand evident. The fundamentals underpinning the market squarely supporting ongoing commercial activity in the year ahead.”
Buyers & sellers pull out all the stops to make deals happen
Low inventory characterizes most markets and asset classes in Q1
national market trends
Click to read more
Click to read more
Click to read more
Click to read more
Click to read more
Browse Commercial Listings
Find an Agent
