Investors have driven CRE demand to peak high
There’s high demand for Canadian commercial real estate as investors seek yields.
2018 started with a strong first quarter with demand outstripping supply with the office sector leading the main asset classes.
There was also strong demand for multi-suite residential and industrial, but tight supply means investors shifting their gaze from the most-in-demand properties in the hottest markets towards smaller markets and second-tier 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."
Mortguard’s new report highlights the increased attraction of commercial real estate at a time when economic uncertainty is heightened by NAFTA talks, global equity markets, and interest rates.
"With global volatility in the equity markets, investors are searching for consistent yields," said Reading. "When combined with the Bank of Canada's prudent approach to interest rates, this creates favourable conditions for real estate investment in Canada."
He says that the year is on course for a record year as investors opt for CRE despite the headwinds.