Canadian cities – with the exception of corruption-ridden, nationalist-leaning Montreal – are leading a revival in commercial real estate in North America while most U.S. cities still need intensive care.
That is the shorthand of a continent wide study by Avison Young that found five out of six Canadian markets surveyed were posting higher investment volumes when compared to 2011, while only one-third of U.S. markets were seeing similar increases.
“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, “said Bill Argeropoulos, Vice-President and Director of Research (Canada) for Avison Young. “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,”
Avison Young forecasts a “strong possibility” that Canada will exceed its previous market peak of 2007. “It’s also conceivable that a number of markets will either match or exceed their previous highs, including Vancouver and Calgary.”
Vancouver had an exceptional first half of 2012 as transaction dollar volume surged 48 per cent from a year earlier, to $2.4 billion, which was attributed to a number of significant transactions including the $401-million acquisition of the Bentall V office tower.
Calgary’s commercial real estate investment market ($2 billion / 16% share) posted an outstanding 111% dollar volume increase in the first half of 2012 compared with the first half of 2011, to $2 billion.
“The strong activity throughout the first half of the year has only been limited by the availability of product. There continues to be significant optimism about Calgary and Alberta as an economic hub for western Canada, and a great place to invest,” said Avison Young Principal Tod Hughes in Calgary.
As a comparison, at $825 million Montreal was the only Canadian market to see year-over-year investment volumes fall ? a decline of 53 per cent. Declines were seen in every property type, except land.
Noted Tom Godber of Avison’s Montreal office: “The summer election of a nationalist government and proposed tax increases, and recent news stories about corruption at the municipal and provincial levels have resulted in some negative publicity” which is playing out in the real estate sector.
