Tech spaces, hotels, data centres and life-science labs are expected to be asset gems for investors in the coming year.Oliver Crook/Getty Images
Commercial real estate will endure continued inflation and interest-rate challenges into the second and third quarters of 2024, experts and economists predict. But there are some asset gems that investors should consider in the coming year that could outpace the market or prove to be good long-term bets.
Consider a data centre in Quebec. With cheap hydro power, the biggest expense involved in data centres, Quebec is a prime location, says Adam Jacobs, senior national director, research at Colliers Canada.
Alternative investments, such as data centres, retirement homes, student apartments and laboratory space, can work well for big institutional investors looking to diversify, he says.
“The advantage to those is they tend to not be tied to the overall economy and job market,” he says. “They’re tied to some other thing or trend in society.” Data centres tap into the bigger trend of everyone being online, for instance.
Nathaniel Baum-Snow, economic analysis and policy professor at Rotman School of Management, adds that data centres, which can be located in rural areas, are a different animal than the usual urban-bound asset.
The health of tech-friendly assets is underscored by the high performance of unit prices for real estate investment trusts (REITS) that focus on that sector, Prof. Baum-Snow says.
“One of the ways people who work in real estate use to forecast the future of different market segments is to look at the valuations of real estate investment trusts that invest in different classes. Any class that involved tech has been doing pretty well … and office has not been doing very well,” Prof. Baum-Snow says.
Office market
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