“The bottom line is the low interest rates will continue to spur acquisitions,” Skip Walters of First Source Mortgage Corporation told MortgageBrokerNews.ca. “With these purchases people are going to need bridge loans, so I see a high volume of financing in 2016 and I believe cap rates will stay where they are.”
According to TREB’s latest figures, a combined 323,761 square feet of industrial, retail, and office space was leased in July 2015, down 11.6 per cent year-over-year. The industrial segment accounted for 71 per cent of that total leased space.
“Both the amount of leased space and the number of commercial properties sold were down on a year-over-year basis in July.
While commercial transactions can be volatile on a month-to-month basis, it is also likely that an uncertain economic outlook weighed on some firms’ decision to relocate and/or take on more space,” Toronto Real Estate Board President Mark McLean said in a release. “However, the GTA economy appears to be performing better than many other regional economies in Canada. This could fuel an increase in demand for commercial space moving forward.”
A total of 60 commercial properties – comprising industrial, retail, and office – were sold in July, down from 80 properties last year.
Prices spiked, however. Industrial properties sold for an average of $125.13 per square foot this year (up 33.7 per cent), commercial sold for an average of $249.56 (+16.3 per cent), and office space was sold for an average of $343.98 per square foot (+84.3 per cent).
“Average sale prices reported on a per square foot basis for transactions with pricing disclosed were up for all three property categories, but the price changes were more associated with a change in the mix of properties sold this year compared to last year,” TREB wrote.
The commercial real estate segment may be suffering along with the economy, but the latest commercial figures show at least one market is expected to see steady originations in the coming year.