Investment in Canada’s commercial real estate sector has been strong all year and—especially in the cases of Toronto and Vancouver—should continue well through 2019.

According to a report by Morguard, titled The 2019 Canadian Economic Outlook and Market Fundamental Report, 2018 is shaping up to be a record year for investment in the sector.

“It’s a real struggle both in Vancouver and Toronto to find office space,” said Keith Reading, Morguard’s director of research and the author of the report. “Choices are very limited for 10,000-plus square feet and rents are at peak for this cycle. There’s no shortage of capital, which is just a function of supply, and 2018 being a record year for investment will continue into 2019.”

Toronto and Vancouver have buoyant economies and the technology sector in both cities is firmly rooted. According to CBRE, Toronto ranks fourth in North America for growth and employment in the tech sector.

While Vancouver is experiencing growth in that sector too, the exorbitant cost of living coupled with parsimonious salaries could pose a problem.

“Vancouver has always had a unique situation in that the cost of living of living here is extremely high, higher than anywhere else in Canada,” said Rene Palsenbarg, Marcus & Millichap’s regional manager and managing broker. “When you look at salaries in the tech sector, or any sector, they’re working on national averages and there’s a skew in the spread of what an adequate salary would be and the cost of living here in Vancouver.

“Tech companies coming to Vancouver really have to analyze the cost of bringing employees on and the benefit packages, because if they don’t they’ll lose talent to some of the other cities in Canada and the United States.”

However, it’s far more likely salaries will rise than Vancouver’s tech industry wilting.

Even if such an unlikely scenario occurred in Canada’s largest city—it won’t—the economy is diverse enough to continue supporting the frenzied desire for commercial real estate space.

“If you look at Toronto, it’s the biggest economic centre in Canada and also the most stable,” said Reading. “Over time, values will only increase in the commercial sector. You can’t just create another Toronto. It’s a 24-hour, world-class city, so your investment is pretty safe in Toronto. It’s a large diverse economy and it has a lot of things going for it. If you’re looking for safety in your investment, Toronto is the first place to go in Canada.”

Record Investment in This Sector will Continue in 2019 by Neil Sharma | Canadian Real Estate Wealth