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Research

Canada Cap Rate Report Q3 2018

Canada Cap Rate Report Q3 2018

Canada Cap Rate Report Q3 2018

For real estate investors, finding good deals has become a challenge. Capital is plentiful and pushing up prices on the best opportunities highlights a competitive market. Construction costs have been rising steadily, in step with real estate prices across Canada, and they are likely to get an upward jolt from the escalating international trade battles. As we close on 2018, one clear emerging trend is the need to Canadian commercial real estate to invest in technology; the expectations of tenants are growing more sophisticated as they integrate smart technology into their businesses and lifestyles and demand personalized experiences. Understanding their shifting needs will be critical for the industry in the future.

  • 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 better performing 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: As the third quarter of the year ends, the GTA investment market remains on pace to set another high-water mark for total dollar volume of sales in 2018 despite the overall number of sales declining year over year. The increase has been aided by strong rental growth and low cap rates for most of the major asset classes.
  • Ottawa: Overall, the last quarter of the year is expected to close out with a number of major transactions similar to what has been witnessed so far in 2018. The soon to be complete Confederation Line will further push development in many parts of the city and help stabilize the retail market.


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