Across Canada, commercial real estate bounced back with the strongest performance in three years, at 11.1 per cent, as measured by the REALpac/IPD Canada annual property index.
The annual total return - a marked turnaround from 2009's negative return, at -0.3 per cent, and 3.7 per cent in 2008 - is underpinned by a 4 per cent capital growth and a 6.5 per cent income return.
The index measured $97 billion of directly held commercial real estate as at the end of 2010.
"A rebound in property values was entirely responsible for boosting the total return back into double-digit territory in 2010," said Simon Fairchild, managing director of IPD North America.
"The return to capital growth last year follows two consecutive years of write-downs worth 9.3 per cent at all property levels."
Stronger returns were posted in all of the four major sectors. For the second year in a row, retails were the top-performing sector with a total return of 15.6 per cent in 2010, followed by industrials at 8.8 per cent, offices at 8.5 per cent and multi-family residential at 7.6 per cent.
In Vancouver, the multi-family sector saw income returns as low as 3 per cent last year.
Montreal led the six largest commercial property markets, with a total return of 14.2 per cent; Edmonton trailed in last with 6.5 per cent, the only market among the six where capital values did not show any recovery. Returns in the other three major markets were as follows: Toronto (10.9 per cent); Ottawa (10.6 per cent); and Calgary (8.7 per cent).
According to IPD Canada, the strong year was a surprise to most in the industry. The median anticipated return in 2010, according to IPD's survey of participants, was a mere 3.9 per cent.
from Western Investor, April 2011
