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Research

Canada Cap Rate Report Q4 2016

Canada Cap Rate Report Q4 2016 (en anglais)

Canada Cap Rate Report Q4 2016 (en anglais)

The outlook for the Canadian real estate market varies throughout the country. Markets such as Vancouver and Toronto have experienced continued development and aggressive price growth. While markets such as Edmonton and Calgary, have been hit hard by economic changes resulting in limited price growth and a significant reduction in development.

  • Edmonton: The retail market in Edmonton continues to be the most consistent asset class. Much of the recent activity pertains to neighbourhood retail strip centres, with most large-format, big-box developments remaining on the sidelines
  • Calgary: There was a significant reduction in achievable face rates and a corresponding increase in capitalization rates as the leasing risk associated with office buildings has risen substantially.
  • Toronto: The Greater Toronto Area has seen several development land transactions take place. The industrial sector also continues to be a prominent asset class for investors.
  • Winnipeg: The biggest change in the past year has been the demand for retail properties. This has driven down cap rates over the past twelve months with further downward pressure on retail cap rates being likely.
  • Vancouver: The expectations were for an additional wave of capital to flood into the commercial market because of the foreign home buyers’ tax implemented in August.
  • Ottawa: Q4 has finished strong for Ottawa with an ongoing steady demand and a limited supply of good quality assets.
  • Halifax: An increased emphasis on leasing fundamentals including strategically deployed capex in order to support modest rent growth, along with tenant retention, will be a key to  maintaining (and improving) asset values at this time.
  • Victoria: Greater Victoria investment sentiment has remained strong over the fourth quarter with the biggest impediment to sales being the lack of available product.

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