Commercial real estate buyers can't get enough, literally

by Steve Randall04 May 2018

The office sector has led activity in the commercial real estate sector in the first three months of 2018.

Mississauga, ON- based real estate company Morguard says that demand for multi-family residential and industrial sales were also brisk but investors were forced to look at second-tier assets and smaller markets due to the lack of available properties.

"The appetite for commercial real estate investment remains at peak highs, with the flow of capital only being limited by the supply of assets available," said Keith Reading, Director of Research at Morguard. "Investors are seeing commercial real estate in Canada, with its strong track record of performance, as a safe bet for investment."

Retail values held steady despite concerns over rising vacancy rates.

"Demand is really remarkable across all the asset classes, even those with increasing headwinds," said Reading. "The number of notable sales already closed and in the pipeline is signifying another record year for investment, provided the supply of assets for sale remains available."

Canadian CRE seen as a safer bet
Investors are considering several issues that are affecting many asset classes; notably uncertainty caused by the ongoing NAFTA negotiations, rising consumer debt, and interest rates.

Volatile equity markets make Canadian commercial real estate assets more attractive when searching for constant yields.

"When combined with the Bank of Canada's prudent approach to interest rates, this creates favourable conditions for real estate investment in Canada," concluded Reading.

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