A robust economy and strong industry fundamentals continue to propel investment activity in the Canadian commercial property sector, according to Avison Young’s Fall 2017 Commercial Real Estate Investment Review (North America and Europe).
“With record amounts of capital still seeking a home, investors continue to find ways to buy into Canada’s finite investable commercial real estate sector,” Avison Young said in the report. “Investment activity is buoyed by a relatively healthy economy that is the envy of the G7 countries and a commercial property market that continues to see varying, but largely healthy, fundamentals across the country’s regions and asset classes.”
In particular, Vancouver and Toronto stand tall as major hubs of commercial real estate activity.
“Vancouver ($7.8 billion/41% share) outpaced Toronto ($6.5 billion/34% share), with investment proceeds surging 75% year-over-year as vendors sought to capitalize on strong demand and peak pricing,” the report noted. “With the exception of Ottawa (which saw investment activity plunge 57%), the remaining markets – Calgary, Edmonton and Montreal – all recorded increases year-over-year, and each exceeded the $1-billion mark.”
“Following a record $28.4 billion in commercial real estate investment sales in 2016, Canada’s six major markets recorded first-half 2017 sales of almost $19 billion – up $4.3 billion, or 29%, from the first half of 2016,” Avison Young added. “Surplus capital that cannot be placed domestically often flows beyond Canada's borders, largely into gateway markets in the U.S., where Canada has retaken its place as the primary source of foreign investment in commercial real estate.”
The most popular asset classes nationwide proved to be office and retail, “which combined for more than $10 billion in trades, or 55% of the first-half investment tally.”
“Toronto and Vancouver made up almost three-quarters of the national office total as investors poured nearly $2 billion into each market, mirroring the results registered one year earlier,” the report revealed.
“Disrupted by e-commerce, the retail sector was a close second with $5.1 billion in transactions (27% share) as first-half investment more than doubled year-over-year,” mainly due to increased interest in Vancouver, which had a total of $3.1 billion in retail investment.
The full text of the report can be accessed from here, with the Canadian section covering pages 17 to 22 of the document.