There continues to be uncertainty around the office market, while the region pushes for more hotel development ahead of FIFA 2026.published by CBRE this week, new office construction in Canada has reached a low that we have not seen in quite some time.
These numbers do not inspire confidence, but likely also do not come as a surprise. Last year, as the wave of top-tier office buildings that were under construction since the pandemic all completed, one of the big questions about the office market was whether new office construction was going to Asked whether this trend of developers choosing hotels over office says more about the office market or more about the hotel market, Ricou said he thinks it's both, along with an increasing recognition that hotels are important to many other swaths of the economy, such as the conventions business and the film industry.
"The asset class in general is volatile, in terms of your income and your revenue," Ricou explained. "In an office or industrial building, you have long-term leases, so you have quite a bit of stability in your income. Banks like stability.
"Office benefits from quite a bit of efficiency," added Ricou. "When you build an office building, it tends to be that a high percentage of the gross area that you build ends up being rentable area. In a hotel, when you think about the back office, the reception area, the luggage rooms, the meeting rooms, and so forth, your percentage of area that you're actually renting out every night is a relatively small component of the overall area build.
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