Vancouver's commercial real estate market continues to face a shortage of available product as the 2010 Winter Olympics approach.
The shortage, especially in the coveted office class, is posing challenges for buyers and sellers as they attempt to narrow their price-expectation gap while the market normalizes following last year's period of excessive demand. However, investor confidence shows continuing improvement amidst slightly increasing vacancy.
Capitalization rates, traditionally the lowest in the country, are not expected to influence office investment greatly, although they may propmpt some industrial and retail investors to spend their increasingly-available cash in other Canadian markets. But Vancouver's strong appeal to international investors, whose love for the West Coast market often defies global crises and downturns, should help offset declines -- and bolster the average sale price, which rose to $29.2 million in the first half of 2009 from $24.5 million in the second half of 2008.
Meanwhile, the post-Olympic period is expected to shine more light on long-term investment prospects as a large number of leases and mortgages roll over. Many office tenants negotiated leases that were designed to expire after the Games so that rental rates would not spike, and mortgages are slated to mature as investors continue to deal with the effects of the U.S. sub-prime mortgage crisis.
To check out the full story, see Avison Young's National Fall Newsletter at www.avisonyoung.com
Showing posts with label National Fall/Winter Newsletter. Show all posts
Showing posts with label National Fall/Winter Newsletter. Show all posts
Tuesday, October 6, 2009
Office product fuels biggest demand
Office space was the most sought-after commercial real estate product in Canada during the first half of this year.
According to Avison Young's National Fall Newsletter, office product amounted to $1.2 billion worth of investment between January to June. But that figure was down from $2.9 billion in 2008 as the Canadian market continued to feel the after-effects of the global financial meltdown and U.S. credit crash.
Vancouver's $506 million worth of investment accounted for most of the office dollar volume. But West Coast office investment was skewed heavily upwards by German investor Deka Immobilien GmbH's surprise unsolicited purchase of Bentall V in downtown Vancouver for $297 million. That deal still stands as the largest in Canada this year.
German investors were also active in other Canadian office markets, purchasing Phase II of the Bell Office campus in Montreal for $94 million and Stampede Station Phase I in Calgary for $74 million.
Meanwhile, overall investment in office, retail, industrial and multi-family properties fell by almost 60% to $3.4 billion from $8.4 billion.
To check out the full newsletter, go to www.avisonyoung.com
According to Avison Young's National Fall Newsletter, office product amounted to $1.2 billion worth of investment between January to June. But that figure was down from $2.9 billion in 2008 as the Canadian market continued to feel the after-effects of the global financial meltdown and U.S. credit crash.
Vancouver's $506 million worth of investment accounted for most of the office dollar volume. But West Coast office investment was skewed heavily upwards by German investor Deka Immobilien GmbH's surprise unsolicited purchase of Bentall V in downtown Vancouver for $297 million. That deal still stands as the largest in Canada this year.
German investors were also active in other Canadian office markets, purchasing Phase II of the Bell Office campus in Montreal for $94 million and Stampede Station Phase I in Calgary for $74 million.
Meanwhile, overall investment in office, retail, industrial and multi-family properties fell by almost 60% to $3.4 billion from $8.4 billion.
To check out the full newsletter, go to www.avisonyoung.com
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