Canadian investment in U.S. commercial market to hit all-time high

by Jamie Henry20 Nov 2014

It’s the inventory challenge Canadian agents don’t talk enough about, but it’s nonetheless drawing both institutional and mom-and-pop buyers south of the border – and into the hands of American brokers.


"The domestic Canadian [commercial real estate market] is quite tightly held by the domestic pension funds," said Lucy Fletcher, vice president of international capital group and capital markets at Jones Lang. "Very few of the assets are trading in the current market."




Canadian investment in commercial real estate south of the border is set to hit an all-time high by the close of this year – driven say agents by the dearth of properties, from small multifamily complexes to downtown office skyscrapers. The alternative for buyers shut out of the domestic market is increasingly to turn to the U.S.


Ivanhoe Cambridge is the latest big player to close on a $2.25-billion deal to buy the 42-storey 1095 Avenue of the Americas landmark building in Manhattan. But that Canadian spending spree extends to all types and sizes of buyers, as the latest numbers suggest.


In the first three quarters of the year, Canadians spent $8 billion on U.S. commercial property, according to news agency Reuters. That’s compared to the $7.8 billion spent in the same period last year. Canada is also on target to surpass the $11.86 billion it spent in all of 2014.


In fact, since 2010, Canada has spent $43.4 billion in the commercial market in the States – four times as much as China, the second biggest spenders in the U.S. market.


Their interest stateside is being felt by commercial agents in this country as they grapple with the same scarcity of properties on the market and the corresponding drop-off in business.


Spending on commercial new builds is on the rise in Canada, say experts, pointing to the latest round of numbers released by the CMHC.


Constructions starts, excluding single-family homes, rose four per cent year-to-date over 2013, to 90,838 units.



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