At the recent WinnipegREALTORS® forecast breakfast, Ken Jones, chair of the association’s Commercial Division, gave a recap of the 2013 commercial real estate market and spoke briefly on his predictions for 2014.
Investment market — Jones described Winnipeg’s market as stable, diversified and growing, which draws investors to the market. Many of the buyers of investment real estate in 2013 were from outside of Manitoba.
Some of the notable investment properties sold in 2013 were 220 Portage Ave. and Madison Square.
Jones predicts that the investment market will perform well in 2014. Financing institutions are in play, interest rates are good, and there is an increasing quality of investment properties available in the Winnipeg market.
Industrial — The industrial vacancy rate in Winnipeg is low and owners are finally seeing some double-digit net rents for their properties.
Unfortunately, many of the industrial properties in Winnipeg are older and fast becoming out of date to meet the demands of today’s tenant demand. Tenants are looking to newer industrial properties to meet the demands they need to compete in today’s economy. When Centre Port finally begins to play a much bigger role in our market, you will see this demand for newer properties increase and hopefully spark either upgrades to current properties or new industrial properties being built.
One success story Jones touched on was the new Bentall Kennedy industrial building at Discovery place. This 150,000-square-foot industrial building is almost completely leased out with 110,000 square feet already occupied.
Retail — The retail market had another really good year in 2013 with both new U.S. and Canadian retailers opening stores in Winnipeg.
It is rumoured that some high-end U.S. retail chains are looking to make their debut in Canada in 2014. Although Winnipeg is generally not the first place most U.S. or high-end retailers look to open up shop, we do, however, remain on the radar for potential expansions once they are established.
Another trend Jones is seeing in the retail market is what’s called “reverse showrooming:” consumers shop for products online to compare pricing and gain knowledge about products before purchasing them, but instead of buying online they go to a bricks-and-mortar store to make their purchase. So this again should keep the retail market strong in 2014.
Office — So far, Winnipeg is not seeing the same trend in the office market as other larger cities in Canada are experiencing; that is, tenants are looking to downsize their current space and move to a more open concept atmosphere or move out of the downtown district into a more suburban area to either attract or maintain staff to cut down their commute times.
Jones broke down the office market as follows:
• The A market is doing well.
• B space is not doing as well. Jones used four recognizable B space office buildings as examples and of the four buildings there was approximately 160,000 square feet of space available.
• Suburban office space is performing well and in high demand.
• Mixed-use space is also becoming popular.
Capital projects — In 2013, two major capital projects were completed: the new airport and the football stadium.
In 2014, the Canadian Museum for Human Rights is slated to be completed, construction on the expansion of the Winnipeg Convention Centre will continue, and the Glasshouse Skyloft condo project is set to start construction in the spring of 2014.