Ottawa’s tight inventory across all asset classes remains a large challenge in the city’s real estate market, according to a report published by Re/Max.
While prices are rising and activity remains high in the capital, the report said that the industrial market in particular has been facing difficulty due to a small inventory base and low vacancies.
“A shortage of industrial land for new construction is expected to keep prices in the industrial segment edging upward in the near-term, as supply remains short,” the report read.
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Re/Max pointed to a shortage of land in the urban and suburban areas of Ottawa, adding that average prices are $130,000 to $140,000 an acre in urban areas. Farmland starts around $10,000 an acre and can go anywhere up to $60,000, although this is contingent on where it is located.
“Investors remain active in all segments of the market, and most are experienced buyers. There has been a rise in the number of smaller investors looking to diversify, particularly as other assets have produced softer returns,” Re/Max stated.
“Stability and income/profit potential are the primary drivers, but so too is the concept that the
buyer has greater control over the investment.”
On the retail side, Re/Max stated that sector is “quite healthy,” although there is still a supply shortage. That’s expected to be eased somewhat by the 250,000-square-foot expansion of Bayshore Shopping Centre, as well as the addition of Nordstrom to the Rideau Centre (which just announced an expansion as well.)
“The competition is fierce and has others scrambling to increase their presence. Stores like
Walmart and Apple are introducing new stores to the marketplace,” Re/Max stated.
“Rumour has it Holt Renfrew will be looking to expand or renovate to keep pace. There’s no question that the retail segment is vibrant. Inventory remains adequate and the market is well balanced overall.”
Government employee reductions are not affecting the office segment as much as initially feared, the report added. It said that lease rates have increased year-over-year and that development land demand is high. However, the report cautioned it could take a while to determine how much the cutbacks will affect the market.