Canada Cap Rate Report Q1 2018

The Canadian commercial real estate market set another record for investments in 2017. With an increasing focus on a work-play-live lifestyle, there remains an appetite for place-making. And while it’s a major focus in rapidly intensifying cities like Toronto and Vancouver, other regions also have big plans. Edmonton’s ICE District, for example, has brought new energy to the downtown core and is drawing interest from buyers and investors. As high-quality commercial property grows more scarce and prices continue to rise, some investors are beginning to look elsewhere for opportunities that could offer superior returns. As 2018 looks to follow in the footsteps of 2017, technology’s impact is everywhere in real estate – and can’t be ignored.

  • Vancouver: The first quarter of 2018 is a continuation of Vancouver’s long run of ever higher prices, and ever compressing cap rates. Factors such as trade and commerce disputes, both international and interprovincial, recent BC government tax changes and another round of rumoured interest rate hikes, may begin to dampen market appetite for real estate.
  • 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: The demand for multi-tenant retail properties remained steady throughout 2017 and is expected to remain strong through 2018. The lack of good quality inventory in the retail sector has held cap rates steady over the past year. Cap rates for retail properties in Winnipeg are typically in the 6.0% to 6.75% range for most transactions.
  • 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 a number of large transactions between regional and local owners at increasingly low capitalization rates. 
 

Canada Cap Rate Report Q1 2018