An annual outlook on real estate trends by consultancy PricewaterhouseCoopers and the non-profit Urban Land Institute said urban living has ceased to be an emerging trend and is now the “new normal.”
“Younger workers in particular — though not exclusively — continue to flock to the urban core, preferring to work where they live, rather than take on long commutes,” the report says.
Members of the millennial generation are not the only ones giving up the more generous living space of suburbia for downtown living. Baby boomers with empty nests and the generation following the millennials, which the report calls "Generation Z," are also joining the trend.
PricewaterhouseCoopers says the urban living trend has fuelled the condo boom in Toronto, Vancouver, Ottawa and other cities.
Companies are also opting to locate in urban areas, where they can attract qualified workers, the report says. This has begun a new boom in high-end office development, but could result in office vacancies in both the urban core and suburban areas as employers seek out more desirable addresses, the report says.
“The movement of workers is driving location decisions for many employers,” it says.
PricewaterhouseCoopers said there seems to be ample capital available in Canada for urban development. And many developers are integrating commercial, residential and retail uses into a single building to “add value to their property holdings.”
Services and amenities, including educational and health care, are racing to catch up with the trend to locate in the city core.
“Looking ahead, we can expect to see more and more retail and services along the streets of Canada’s city cores and along major transit arteries, especially where new developments predominate,” the report says.
Couples with children
Authors of the report point out the uncertainty over what will happen when the young couples currently buying condos have children and want more space.
It will depend on whether baby boomers stay in their homes or begin to sell them, bringing down prices and making more single-family houses in near-urban areas available to young families, the report says. The trend toward urban development is encouraging these couples to seek out real estate near transit, it adds.
Another possibility, if real estate prices keep rising, is more multi-generational homes, as single family homes will be too expensive for young families.
According to Statistics Canada, the most recent numbers available show that the population of urban centres grew 7.1 per cent between 2006 and 2011.
The report says Calgary, Edmonton and Vancouver will see the most residential growth in 2015.
The report points out that construction materials and labour in the construction industry are becoming increasingly expensive, which could slow the pace of development.