Canadian commercial real estate demand is shifting due to the country’s housing crisis, says a new Re/Max report.

The report shows that multi-family and industrial are the top-performing assets in 12 markets surveyed.

“Population growth is seriously impacting housing markets across the country, and the need for affordable housing is critical,” said Christopher Alexander in an interview with Connect on Thursday.

“A lot of purpose-built rentals, multiplex units, and things of that nature are dominating right now.”

The Canada Mortgage and Housing Corporation has “sweetened the pot” with its Canadian Apartments Loan program, low interest rates and 50-year amortization periods. Those incentives and the federal government’s decision to scrap the goods and services tax on purpose-built rental projects. He views the situation as a perfect storm of beneficial factors, while the report notes that multi-family construction continues to run unabated across Canada.

“The main driver or main focus right now for a lot of development is to build purpose built rentals for housing,” said Alexander.

He expects the Bank of Canada’s decision to cut its key overnight interest rate to 4.75% from 5% to boost demand further. The cut, announced Wednesday, has already sparked more appetite among prospective buyers, he said.

“I’ve already heard from many people in our [agent] network, that they’re getting a lot more phone calls,” he said. “It’s only been 24 hours. Rates are still much higher than they were when people originally borrowed four or five years ago. The more they come down, the more [the reductions] will stimulate.

“But it’s certainly going to give the market a bit of a boost immediately.”

Wednesday’s cut will give consumers confidence that they have been looking for and help people make buying decisions, he added.

Multi-family real estate demand is prompting retail investors in major urban centres to increase density on their properties to maximize results, says the report.

Although industrial availability has increased overall, the sector continues to experience strong demand across the country. End users are the most active industrial investors, while warehousing, manufacturing and flex space properties are most sought-after assets..

“Industrial’s, been the strongest-performing sector, even when [interest] rates started to go up, so I think it’s only gonna get stronger now,” said Alexander.

More later …