Tuesday, February 16, 2016

Love Is In The Air - Market Segments Clients Love

With Valentine’s Day just this past weekend, love is definitely in the air. After a weekend of blowing your budget on your significant other, our investor clients are thinking of ways they can reverse some of the damage by making a solid investment.

In honour of Hershey’s favourite holiday, we have a list of some of the market segments our clients are loving in 2016:

  1. Industrial – During the downturn of 2008-09, the manufacturing sector was especially hard hit, with several of the large automakers on the brink of bankruptcy. The restructuring that went along with that has brought about the rebound of the last several years. This year we are looking at a record year for auto sales and the roll out of many new cars. This is all translating into super low supply of buildings, increasing rents and the start of a new construction cycle. We see continued upward pressure on prices and rental rates as new construction costs are prohibitive compared to resale in many cases.
  2. Multifamily – The demand for yield with today’s near zero percent interest rates has fueled unprecedented demand for multifamily investment properties. This demand has far outstripped supply and prices have rose and cap rates have fallen. With continuing low supply and high demand we see this trend persisting and further downward pressure on cap rates. In our market specifically of Windsor ON, we still have a cap rate discrepancy with larger markets in Canada and we see that continuing to narrow.
  3. Retail Plazas – Stable, long life assets such as these have always had plenty of investor interest and with cap rate compression this has increased demand. Cap Rates on Retail Plazas are still significantly higher than multifamily and as such we see a narrowing of this spread as plaza prices continue to rise.
  4. Small Turn Key Office Space – Office space units of 1500-2000’ with good existing buildouts are in high demand in our market and landlord’s with these vacancies are sure to benefit. Office tenant’s seem to be doing more with less square footage these days and smaller spaces such as this are more marketable.
  5. Townhouses & Condos – With our previous discussion about the aging population, demand from downsizing baby boomer has been buoyant in the townhome & condo market. Millennial buyers have also had a preference to this segment of property. New construction of townhomes have been booming and a new wave of condo construction has begun. We see this trend continuing as demographics continue to support it.

These are the segments being shown the love in our market. Where is the love in yours?

Russel Lalovich
Office: (519) 966-0444
Cell: (519) 995-5620

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