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AGING, TECh AND E-COMMERCE REshAPE REAL EsTATE LANDsCAPE
Neil Cunningham Senior Vice President & Head of Global Real Estate Investments PSP Investments If securing strong, stable cash flow is your objective, the best bet in the real estate business is to build facilities that serve seniors, suggested Neil Cunningham, senior Vice President & head of Global Real Estate Investments, PsP Investments. “Demographics are unstoppable,” he said. “Anything which relates to how you house seniors and meet their needs will have the trend going with you. Whatever you do on that front, you will have the wind at your back.” 48
Multifamily properties also ought to outperform retail and office, despite Ontario’s decision to implement rent controls, which took off some of its shine. Looking further into the future, Cunningham foresees today’s flight from the suburbs reversing, as millennials begin to have children and move back out to the suburbs. “Logistics remains another attractive space for investors seeking to secure cash flow,” Cunningham added. Downtown, technology businesses are increasingly taking up office space “because that’s where their employees want to live because that’s where the action is.” Flexible office properties are a must, he insisted, in order to accommodate those tech firms’ broad range of needs. “An office building which doesn’t have a good combination of ceiling height, good fenestration and maximum column-free space will be uncompetitive in terms of what people want to do with their office space these days,” Cunningham said. Live, work, play amenities remain essential,
he acknowledged, but “I would add ‘learn’ to that.” he advocates adding a fourth dimension – education – to the real estate industry’s credo. “People definitely want continuous, lifelong learning and retraining.” Electronic commerce is exerting another irresistible force that will transform real estate markets, Cunningham observed. “We will not be going back to retail-as-usual,” Cunningham predicted, though it remains unclear to what extent and how online purchases will reshape the balance of distribution and sales. “It won’t be a clearly delineated line,” he affirmed, “because there are many ways of buying, picking up and returning products.” With a flood of capital continuing to drive up valuations, the quest for returns will remain a challenge to real estate investors heading into 2018, Cunningham expects. “It’s definitely a market in which avoiding mistakes – especially big mistakes – is the name of the game,” he advised. “so we’re being very careful. Until 2016, overall market movement meant that anything which you bought did well. Today, you need to play the niches more.” ■ Robert Frank Canadian Real Estate Forum / WINTER 2017