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Research

Canada Cap Rate Report Q2 2018

Canada Cap Rate Report Q2 2018

Canada Cap Rate Report Q2 2018

The Canadian commercial real estate economy remains a positive market for investors as they remain enthusiastic about Canada after a record volume of transactions in 2017. That activity has remained through the first two quarters of 2018, mired only by a lack of high quality product available for acquisition. This should continue to position the Canadian commercial real estate market as on marked by competition and intense bidding. With the pace of interest rates hikes expected to remain measured, access to low-cost debt and equity capital will propel Canadian commercial real estate investment in 2018.

  • Vancouver: Interest rates continue to remain low and so the appetite for commercial investment real estate – in particular, apartment buildings – remains very strong in the Greater Vancouver area.
  • Edmonton: Edmonton remains a consistent market with strong, well-placed assets garnering investor attention and is expected to have one of the fastest growing economies in 2018.
  • Calgary: Retail and Industrial assets have remained stable in Calgary, while multi-family assets have shown signs of confidence as investors are willing to accept lower yields on new low-rise construction.
  • Winnipeg: Demand for good quality investment continues to be strong; however, if cap rates do increase due to rising interest rates, expect the multi-family market to be impacted first due to the low spread currently being experienced in the market.
  • Toronto: This early barrage of large scale transactions suggests the GTA is primed for another record setting year in terms of total dollar volume sales in the investment market. However, with rising interest rates we expect investors to be more cautious when it comes to non-core assets in tertiary markets.
  • Ottawa: Transaction volume in Ottawa has increased substantially year to date in Ottawa led by the multi-family market which has seen several large transactions between regional and local owners at increasingly low capitalization rates.


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