There are a number of trends in the Real Estate market to keep an eye out out for in the upcoming year. The shift from urbanization to suburbanization as a result low interest rates and effects of Covid, the evolution from brick-and-mortar retail to e-commerce, and the social nature of humans is expected to act as a driver for the commercial office landscape.


Single family homes have been the talk of the town this year, with low interest rates driving demand to record highs. In October 2020, the national average sale price posted a 15.2% year-over-year gain to settle at an average price of $607,250. What is expected to come in 2021? Will Covid single family homes continue to lead in housing starts? Will prices continue to rise?

Figure 1 – Residential Home Prices 2020 (CREA, 2020)

Recovery in major markets is yet to be determined, although there is a general sentiment leaning towards a shift in the urbanization trend, meaning it’s likely that we’ll see more people looking to flee the highly populated city centres in exchange for a home somewhere in a suburban area. The reason for this shift is due to pandemic related worries about dense areas, more space for around the same price as urban, and the ability to escape the typical open concept apartments in cities in exchange for having the ability to set up an office with many workplaces transitioning to a fully online workspace. Furthermore, higher unemployment and economic uncertainty, along with lower immigration rates are expected to slow housing activity across Canada. The Canada Mortgage and Housing Corporation expects housing starts to begin to slow down in 2021. In addition, prices are expected to soften in 2021 due to the recent federal government fiscal update in which the Liberal government have said they’ll be imposing a tax on foreign investors who own homes in Canada; this will likely result in higher supply for Canadian homebuyers and a softened price from 2020.  

As for the Condominium market, the main drivers directing the outlook of this segment are the lessened demand from Covid, consumer sentiment shifting away from the urban areas, and a limited number of immigration upcoming in 2021. According to PwC, the Condo market is expected to soften with regard to price. Despite the reduced supply in some areas, urban city centres like Toronto are seeing more and more consumers not wishing to pursue a short term rental, they’re more likely to look elsewhere considering the key incentive of condos is the convenience of being relatively close to urban centres and neighbourhood amenities – these have both become slightly less attractive with Covid’s presence in the past year.

Figure 2 – Landlord Rent Collection Compared with Historical Average (CBRE, 2020)

Multifamily properties refer to any building in which multiple families can live – this is most commonly a purpose-built rental, it can also include townhouse, or side-by-side homes. The effects of Covid in the multi-family home market have been modest relative to other income producing assets. During the initial lockdown, property owners have collected ~96% of their rent payments, with 61% of firms stating this number is in line with their historical average. Moving into 2021, demand for rental housing is expected to be affected by a drop in immigration and many university students taking online classes rather than in person. It’s expected that the rental market will benefit from the above-mentioned homeownership slowdown and the excess of immigration when the borders begin reopening. Overall, the outlook for the multifamily residential market is one of optimism, with apartment owners expected to benefit from vaccine programs, resurgence of immigration, and students coming back to in-person classes.

Figure 3 – Housing Starts by City (PwC, 2020)


According to a recent survey by PwC, there is a structural shift in the retail industry, primarily the way consumers and sellers interact through the acceleration of e-commerce. With brick-and-mortar retail centres like malls, shopping centres, clothing stores, being hit relatively hard throughout 2020, there is a strong sentiment that these brick-and-mortar retail centres will begin to evolve over the course of 2021 – primarily to facilitate and capitalize on the growing trend of online shopping. In November 2020, two mid-sized publicly traded REITs CBL & Associates Properties Inc. and Pennsylvania REIT Trust filed for bankruptcy, this is the result of tenants not being able to keep up with their rent payments due to the substantial decline in foot traffic in retail malls. Coming out of the pandemic, it’s likely people will remain hesitant to go into high density areas like malls and will opt to shop online instead. In order to not go bankrupt, the need for retail malls to evolve and accommodate changes is necessary, these changes take shape in the form of conversion into residential or mixed-use properties, using their empty space for storage, distribution, and fulfillment to satisfy the trend of online shopping. Furthermore, grocery-anchored retail is expected to continue to thrive as they have throughout 2020 when they realized record sales. Into 2021, grocery-anchored properties will likely fare well, with bigger players in the Canadian market reallocating capital away from riskier, cyclical retail properties like malls and instead invest into the safe and defensive natured grocery-anchored retail.

Figure 4 – Office Vacancy Rates by City, (PwC, 2020)

The office industry has been hit particularly hard by the effects of Covid, most Canadian downtown centres have seen their vacancy rates rising over the third quarter of 2020 by around 200 basis points. This increase is the result of two trends, the first being subleasing. The recent increase in sublease listings accounted for around 1.6 million sq. ft of the newly vacant 4 million sq. ft in Canada’s downtown centres; given the economic downturn resulting from the pandemic, companies have decided to sublease in the aim of mitigating risk and improving their cash-flows. The remaining increase in vacant space came from the disconnect in the typical leasing cycle; measures taken to reduce the spread of Covid has led to touring and other leasing activities to plummet and has been the primary reason of many listings to remain vacant into 2021. Although, despite the negative effects of Covid, some question whether the style of working from home is sustainable or if it’s only a temporary remedy to an otherwise unlikely situation. According to a survey by PWC, of employees yet to return to the workplace, 78% expect to do so within by the end of 2020. Complimentary to this, 34% of employees said they would prefer to work entirely online, whereas 37% want to be in the office and 29% want an even split between the two. These findings reflect the overall uncertainty about the extent companies will bring their employees back to the office, but some developers and institutional investors are confident the market will bounce back because at the end of the day, humans are social creatures and they rely on the interaction and collaboration with one another in a work environment.