Photo: Reto Fetz/Flickr
Overseas investors, especially from the United States, are once again parking their money in Canada’s commercial real estate market, according to the Colliers Global Investor Sentiment Survey for 2015.
Thus far in 2014, buyers from the US picked up 18 office buildings, for a total of $539 million US. Colliers hailed it as a “return of cross-border investors,” with other international investments including Ponte Gadea Group’s big Mink Mile purchase in June. The real estate holdings firm, headed by Zara-founder and the fourth richest person in the world Amancio Ortega Gaona acquired 150 Bloor Street West in Toronto for about $235 million US. The 270,000-square-foot building is home to office and retail space including a Tiffany & Co. and a Louis Vuitton.
However, overall Canadian investment volumes for the office, industrial and retail sector worth $7.5 million US or more dropped. The $7.2 billion US in sales recorded for 2014 year-to-date was a 57 per cent decrease compared to the same time frame in 2013. Colliers doesn’t wrack this up to a lack of interest as it’s more of a supply issue thanks to a reduction of availability in Class A product, leading to fierce competition for prime commercial real estate.
Still, Canadian investors appear to be more comfortable keeping their money closer to home, with 71 per cent keeping capital within North America in 2014. After North America, 59 per cent of Canadian investors showed a preference for Europe, with 71 per cent saying it was a target region in the coming year.
One big shift observed in 2014? The move from institutional buyers to private capital. While institutional investors, such as Ontario Teachers’ Pension Plan and Caisse de dépôt et placement du Québec, still dominate, their hold on the market has dropped from a 56 per cent office market share in 2013 to 38 per cent this year. Meanwhile, private capital saw an increase from 9 per cent in 2013 to 15 per cent in 2014.