Report after report lately tells us that Canadian real estate is in for a quiet 2024. Even so, industry stakeholders say that the multifamily and industrial sectors will see “positive momentum” in the year to come.

"As interest rates and inflation rates gradually decline, there is an anticipation of pent-up investment demand within the property sector," explains Keith Reading, Senior Director of Research for Morguard — a Mississauga-based real estate and property management company that released its 2024 forecast for the Canadian real estate market and economy on Tuesday.

"Multi-suite residential rental properties are expected to be particularly attractive to investors given their healthy fundamentals and positive rent growth outlook."

In particular, the report notes that multi-suite residential will see “persistent demand-supply imbalance” as we enter 2024.

“Supply will become increasingly constrained across the country. Vacancy will continue to decline and fall below 1% in several regions. As a result, rents will continue to climb,” it says.

“Rents will rise more sharply in provinces that do not have rent controls. Moreover, rents will rise more sharply when a unit is rented to a new tenant. Increases will be more modest when leases are renewed or extended.”

The report adds that immigration activity will only make for a tighter rental market next year, and more upside potential for those invested in the segment.

“Construction activity will likely slow over the near-term while interest rates remain high,” it also says. “The construction slowdown may exacerbate the market’s persistent demand-supply imbalance forecast for the near term.”

As for Canada’s commercial segment, Morguard says it’s a bit of a mixed bag. There’s little indication that the challenges that confronted the country’s office segment in 2023 will relent in 2024, and the retail market is expected to stabilize but “remain largely bearish” from an investment standpoint — but the story is expected to be one of strength for their industrial counterpart.

“Canada’s industrial leasing market outlook is generally stable and healthy, following the record-setting performance of the past couple of years,” says the report. “Supply will remain constrained over the final few weeks of 2023 and in the first half of 2024.”

And while the new year will bring new supply, the expectation is that “newly built space will be absorbed prior to or shortly after completion.”

Digging deeper into the industrial asset class, Morguard says that warehouse and logistics will continue to “lead the way” in terms of expansion across the country, while the manufacturer sector will expand notably in certain markets.

“Leasing market conditions will remain tight over the near term, which will result in continued upward pressure on rents,” the report says.