Canadian commercial real estate investment value hits $43B record high

Commercial real estate deals surpassed records for the second consecutive year in 2017 - and are on track for new highs in 2018

By
Western Investor
March 1, 2018





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The Canadian commercial real estate market had another record-breaking year in 2017, with 2018 on pace to surpass its $42-billion transaction value. 

CBRE Canada’s 2018 Real Estate Market Outlook Report revealed that 2017’s transaction value was up nearly $10 billion over 2016. The report predicts 2018 will be the nation’s third-consecutive record-high investment year.

“We have record low vacancy rates, record low unemployment, increasing institutional allocation to real estate and supportive immigration that fuels population growth,” said Paul Morassutti, executive managaing director of CBRE Canada. ““Every year, we critically assess the threats to the Canadian commercial real estate market, but for each challenge we found, there was an even stronger reason to be optimistic about 2018.”

Canada was one of only four countries to set back-to-back records for commercial real estate investment, CBRE states. China, Spain and the Netherlands shared the distinction. 

The company believes investors will continue to flock to the Canadian real estate market for its high-yield assets that are relatively free from the impact of global turmoil. Despite siting the turbulent future of NAFTA and interest rate hikes as possible deterrents, CBRE believes investment momentum won’t be slowing down anytime soon.  

“When we considered the effect of expected increases in interest rates in 2018, although it raises the carrying costs of landlords and could potentially put pressure on cap rates, it will be mitigated by the rental growth that our record low vacancies will drive during the year,” Morassutti said. 

Vancouver’s downtown office vacancy is predicted to fall to 4.9 per cent in 2018, remaining among the lowest in the country, second only to Toronto’s 3.3 per cent. 

With office inventory predicted to remain stagnant until 2020, office demand will likely drive demand and rent increases into 2018.


Tanya is Western Investor's web content and social media coordinator. She first joined the Western Investor team as a editorial assistant in 2016, after a summer spent freelancing at Glacier Media papers The Burnaby Now and New West Record. She is a graduate of Langara College's journalism program.
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