TD Real Estate Conference Highlights 2023

Earlier this year, TD Securities hosted our fourth annual Canadian Real Estate Conference, featuring 18 panel and fireside chats and two keynote luncheon presentations. Additionally, we hosted guided tours and drive-bys of over 15 properties in Downtown Toronto. In terms of YTD 2023 returns, we have seen outperformance by many of those names and sectors that underperformed last year.

"Once again TD Securities Real Estate Conference brought together both our institutional investors and public issuer clients, this time in-person, facilitating informative dialogue in a set of one-on-one meetings and company specific Q&A and industry/thematic panels," said Armen Farian, Managing Director and Head of Canadian Real Estate Investment Banking. "The conference provided a formal and informal forum for investors to learn from decision makers and industry experts about their latest experiences, expectations, immediate priorities and strategic plans."

• Multi-Family / Apartments: Overall, management teams pointed to very strong multi-family fundamentals across Canada. Availability remains exceptionally tight. During our conference, we held a residential development panel where we heard – despite today's supply-demand imbalance – that management teams were approaching new development cautiously in the current environment of elevated interest rates and construction costs.
• Industrial: Strong industrial fundamentals are continuing across most of Canada, with notable strength seen in the GTA, GVA, GMA, and Ottawa. The Halifax and Southwestern Ontario markets were also highlighted as having strong industrial fundamentals currently. We also heard that the market strength in the U.S. and Europe is overall being sustained.
• Retail: Seasonal store retail closures this month are once again trending at muted levels relative to most years, and all signs point to continued strong leasing demand across many categories. The pace of new residential development starts has slowed as management teams await more clarity - primarily on the ability to generate profitable development yields. Despite this, we consistently heard that values for high-density land are holding up well.
• Seniors Housing: Post-COVID recovery continues across the industry at different paces across geographic markets in Canada. Occupancies are trending up in most markets owing to a combination of favourable demographic tailwinds, pent up demand, and slowing new supply growth. Although staffing costs remained elevated in 2022, management teams expect some moderation in 2023 coming from an improvement in employee recruitment/retention and a reduced reliance on agency costs, which should help push operating margins higher.
• Office: Fundamentals have largely held steady over the past couple of quarters. In Downtown Toronto, physical utilization ticked upwards throughout 2022, with most tenants returning to the office on a 3–4-day work schedule. Construction has slowed versus pre-pandemic, which saw large growth in Toronto and Vancouver markets. Tech sector layoffs have had less of an impact on the Canadian market thus far versus the U.S. Additionally, most tech firms are currently seeing a minimal impact from the hybrid-work trend as many implemented these policies pre-COVID.