Lenders look to increase commercial real estate allocation

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A comprehensive industry survey suggests lenders are still bullish on the Canadian real estate market, but the focus going forward will be on specific cities.

“Favourable debt terms are spurring greater interest in investing in commercial real estate. If you go to the source and follow the money, you have a good idea of what to expect in the year ahead,” Carmin Di Fiore, executive vice president of CBRE’s debt and structured finance group, said in a release. “Economic volatility and a possible U.S. interest rate hike make Canadian lender sentiment even more critical as we head into 2016.”

CBRE released a survey last week that found 73% of lenders plan to increase their allocation in commercial real estate next year. And while that is good news for all brokers – as it speaks to the strength of the housing industry – commercial brokers will specifically be set for a busy 2016.

“The Canadian retail landscape has had a challenging year, but lenders remain confident due to the solid financial backing of REITs and pension fund landlords,” Di Fiore said. “The industrial market will be hotly contested in 2016 as an improving U.S. economy and favourable exchange rates are expected to boost industrial property fundamentals.”

And brokers in certain areas will benefit more than others.

The study found that 80% of lenders have a strong desire to lend in the Greater Vancouver Area, and 77% have a strong desire to lend in the Greater Toronto Area.

On the flip side of that, only 17% of lenders have a strong desire to lend in Victoria, and 37% have a strong desire to lend in the Greater Montreal Area.

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