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Hamilton commercial real estate market hit four-year record sales in 2020

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After being on the market for about a month at a $9-million asking price, the historic Coppley building on Cannon Street East has been sold to an investor from outside Hamilton. The deal on the century-old former home to the high-end menswear company is set to close later this year. Prior to the sale, the brick-and-beam building, with three floors of commercial space, was being renovated.

“We are really happy about 22 Cannon because it fit exactly the investment thesis that we’ve been saying all along,” said Jeremiah Shamess, vice-president of the private capital investment group at Colliers that listed the building.

His team has been encouraging investors from outside markets to consider commercial real estate opportunities in Hamilton, he said, including the sale of Corktown Plaza at 225 John St. S. to Toronto-based Slate Asset Management. In Dundas, Colliers listed and conditionally sold another plaza at 232 Governors Rd., and firmly sold a former Canadian Tire building at 50 Cootes Dr.

“There’s a good arbitrage there, to get more space for the same amount of money in a growth node that will continue to see the winds of investment moving its way,” said Shamess, adding that he personally will continue to be an advocate for investment in the city. “I really love Hamilton, so I’ve been doing quite a bit of work here.”

The city has attracted $607 million in commercial real estate transactions by private buyers in 2020, compared to $504 million in 2019, according to data provided by Altus Group, a commercial real estate analytics and consulting firm. Hamilton is also attracting more institutional investors, with an 83 per cent jump in transaction activity up to $192 million in 2020 compared to $32.1 million in 2019. Developer transactions fell to $180 million in 2020, compared to $211 million in 2019.

Where national trends have shown a 21 per cent drop in total commercial real estate investment activity in 2020 compared to 2019, Hamilton’s market is booming. In 2020, Hamilton saw $1.2 billion in a total 202 commercial real estate transactions, the highest since 2017. The apartment sector saw the highest total transactions in 2020 at $403.7 million compared to $199.4 million in 2019, followed by retail.

Hamilton has been an attractive destination for homebuyers from the GTA, with commercial investors following as more businesses and offices are established, said Ray Wong, vice-president of data operations at Altus Group. “What’s great about Hamilton is the airport, especially as the cargo charges are less than Pearson [International Airport] and it offers an alternative for some businesses,” Wong said.

Data collected by Forge and Foster, a Hamilton-based company that invests in and manages commercial real estate, also saw a record year for commercial real estate value in 2020 with a relatively low number of transactions.

“That indicates to me that Hamilton is starting to recognize a lot of major firms that are buying larger assets and investing in Hamilton,” said Alex Manojlovich, an associate at Forge and Foster. He is also seeing a trend toward “flex space” in industrial properties, which is space that can be flexible to accommodate different building tenants including offices, clinics, and restaurants. But for local investors, the commercial market is starting to feel crowded.

“It’s very hard to justify for local investors, because we’re having so many people coming from out of town, so people coming from Toronto are investing in Hamilton,” said Nicolas von Bredow, a director at the Realtors Association of Hamilton-Burlington and broker and managing partner at Royal LePage Macro Realty. “They’re used to a lot lower returns on their money on commercial investment real estate than the local here in Hamilton are used to.”

This article was authored by Vjosa Isai and was originally published in The Hamilton Spectator on May 10, 2021.