Construction and investment in industrial buildings, along with their ongoing operations, contribute $21.7 billion to Canada’s economy, according to the Real Property Association of Canada’s (REALpac) study, “The Contributions of the Industrial Real Estate Sector to the Canadian Economy.”
As part of a landmark study examining the commercial real estate industry, including the office and retail sectors, REALpac also examined a few industrial trends materializing during the period of 2009 to 2013.
One such finding shows capital investment increased from $6.4 billion to $8.7 billion over those four years and it continues to prosper due to strong investment in new properties. For instance, construction investment in new industrial buildings rose $1.4 billion to $6.8 billion, while a total of $1.9 billion was invested in improvements and upgrades.
These numbers echo what Kevan Gorrie, trustee, president and co-chief executive officer at Pure Industries Real Estate Trust (PIRET), sees as an evolutionary role in the real estate industry.
“As a real estate asset class, industrial has really come into its own as a recognized stable investment,” he said, “and it has moved to the leading edge of the economy as industrial owners are developing and reinvesting in their properties to respond to rapidly changing trends in the way goods are purchased and delivered to consumers in this country and around the world.”
Although the manufacturing sector is still the main player, warehouses and distribution centres are driving this new development.
In turn, building management, from planning and managing industrial properties to providing security and maintenance, offer significant economic contributions. Property and building management contributed $1.4 billion in management fees.
On the career front, this is a sector that supports about 111,900 jobs every year, generating $7.0 billion in income and, as a result, close to $2.6 billion in personal and corporate income tax revenues go to the federal and provincial governments.
Regionally, Ontario generated the most direct economic activity at $3.7 billion, followed by Quebec and Alberta.
And even though Ontario supports the majority of jobs in real estate—more than 42,000 mainly stemming from new construction—Alberta offers the highest average wage in industrial real estate at $74,000 per year. Meanwhile, Atlantic Canada supports the lowest wages.
Many small to medium-size companies, including larger companies, generated $4.4 billion in corporate profits in 2013, mainly in Alberta, Quebec and British Columbia respectively. Ontario generated the least profit at $1.53 million.
Overall, capital investment in industrial real estate represented more than one third of the total investment in the whole CRE sector.
Such conclusions from the REALpac study were compiled from various sources including Statistics Canada, the Altus Group and secondary sources including The Canadian Real Estate Association and the Canadian Revenue Agency.
