While some folks may be doing a bit of hand wringing over parts of Canada’s housing market, the nation’s commercial real estate investment scene is ballooning in many major markets, according to a new a report from Avison Young.
“Canada’s overall economic well-being and stable commercial real estate market fundamentals, characterized by low-to-mid single-digit vacancy rates, along with historically low interest rates, are driving the flow of capital across most regions and asset classes – something that we have not seen to the same degree in the U.S.,” stated Avison Young CEO Mark E. Rose in the Fall 2012 report, which falls under the headline: “Canadian commercial real estate investment volumes on verge of exceeding pre-credit crisis levels, while investors’ lingering indecision stymies U.S. recovery.”
The report covers commercial real estate investment in 18 North American markets, six of which are Canadian: Montreal, Ottawa, Toronto, Calgary, Edmonton and Vancouver. Of those six Canadian cities, only Montreal saw lower investment volumes year-over-year.
“Canada’s commercial real estate investment sector has rebounded strongly from the market trough, with investment sales volumes and pricing reminiscent of pre-credit crisis levels,” states Bill Argeropoulos, vice-president and director of research for Avison Young, in the report. “Through the first six months of 2012, almost $13 billion worth of commercial real estate assets changed hands, an increase of 26 per cent compared with the first six months of 2011. Given the current deal pipeline, and barring any delays causing deals to be pushed into next year, there is a strong possibility that Canada will exceed its previous market peak. It’s also conceivable that a number of markets will either match or exceed their previous highs, including Vancouver and Calgary in the west and Toronto and Ottawa in the east.”
Office buildings were the most actively traded asset in the first half of 2012, the report says, capturing 39 per cent of the total investment dollars. In fact, $5 billion worth of office properties transacted in the six-month period – highlighted by the $1.3-billion sale of Scotia Plaza in Toronto, Bentall V ($401 million) in Vancouver, and Calgary Place ($312 million) in Calgary. Coincidentally, Toronto ($2.7 billion), Calgary ($1.1 billion) and Vancouver ($707 million) led all Canadian markets in terms of office sales.
To read the entire report, click here.