A sharp upward trend in Canadian commercial property sales volume in 2016 will pave the way for the sector’s consistent performance this year, according to a new report from CBRE.
The report noted that sales of Canada’s office, hotel, and retail properties have reached record-breaking heights last year, fuelled by a strong influx of foreign capital into the nation’s commercial real estate sector. A contributing factor is a so-called “Trump effect” that has led to much uncertainty about the prospects of the U.S. market.
“The level of uncertainty that we see globally is at an all-time high. I would include geopolitical uncertainty and economic uncertainty,” CBRE Canada executive vice president and executive managing director Paul Morassutti said, as quoted by the Financial Post.
“When you consider the most consequential economy on earth, the United States, we really don’t know at this point what type of foreign policy is coming out of the States, what type of trade policy. There has been no coherent economic strategy since the inauguration.”
Approximately $34.7 billion worth of Canadian commercial real estate deals have been completed last year, and CBRE stated that demand from foreign buyers will not slow down any time soon—especially since the Toronto market is projected to remain inflamed in the foreseeable future.
“Toronto starts 2017 on the A-list of commercial real estate markets. Real estate players from cities across the globe are casting envious glances at its performance. The numbers are truly compelling. It has the lowest downtown office vacancy rate of any major North American city with good rental growth projected for 2017, it has the second lowest industrial availability rate, the second lowest multifamily vacancy rate and its hotels recorded record occupancy levels in 2016,” Morassutti explained.
Data released by CBRE on mid-February revealed that the portion of commercial property deals (worth $10 million and above) involving foreign investors has increased by 33 per cent year-over-year in 2016, up to $34.7 billion.
The figure exceeded the previous record of $32.1 billion set in 2007. Toronto accounted for S12.2 billion of the commercial real estate transactions last year, up from $10.8 billion in 2015. Vancouver followed suit with $8.1 billion in 2016 ($5.7 billion the year prior).
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