Slower job growth is expected to weigh on the multi-suite residential real estate sector in the near term, according to a new report. 

Real estate firm Morguard released a report Tuesday on the performance of Canada’s commercial real estate market in the third quarter. It found that increased immigration and stronger than anticipated job growth spurred an increase in demand for rental housing earlier this year.

While rent growth in multi-suite residential real estate accelerated in the third quarter of this year, the report projected that rent growth would ease in the short term, reversing that trend.

“This can be attributed to significant deceleration in job growth for the remainder of this year and into early 2024,” the report said. “Additionally, international migration volume is projected to moderate, and young workers will hesitate to secure rental accommodation amid economic and labour market uncertainty.”

RENTAL DEMAND

As of September 2023, the report said the average asking rate for purpose-built units in the nation’s 35 top markets rose by 14.6 per cent year-over-year based on data from Urbanation Inc.’s Rentals.ca network. 

Rental demand outpaced supply for the multi-suite residential sector in the third quarter, contributing to accelerated rent growth, the report said. 

COMMERCIAL PROPERTY OUTLOOK

Overall, the report said that “major Canadian commercial property sectors” were stable during the third quarter.

It also predicted that Canada’s economy would slow in the short term and subsequently “strengthen” in the second half of 2024 and beyond. 

"The industry has the potential to rebound in early 2024 depending on the central bank’s rate decisions and the effects of the monetary policy," Keith Reading, a senior director of research at Morguar, said in a written statement.

"The alleviation of inflationary pressures and adjustments in interest rates will remain pivotal in shaping the trajectory of Canada’s economy going forward."