Canada's commercial real estate investment market is expected to pick up in 2010.
Avison Young's 2010 Forecast says investment transaction volume dropped 55% to $5.4 billion in the first nine months of last year. Simply put, owners were reluctant to sell their assets at de-valued rates, so they held on to them instead.
Although 2010 is not expected to set any investment records, investors may face more pressure to make moves this year as the economy improves and REITs re-enter the market. Vancouver, Calgary and Montreal are among the cities expected to experience increases.
But Toronto will be a notable exception. Brokers there believe that rents still have to complete an adjustment, and in some cases decline further.
Still, at least two REITS, ARTIS out of Winnipeg and Toronto-based Dundee, have been extremely active in late 2009 and early 2010.
Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Wednesday, January 13, 2010
Tuesday, October 6, 2009
Vancouver prepares for post-Olympic influences
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
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
Thursday, September 17, 2009
Investors remain confident in Calgary market
Calgary commercial real estate investment activity will pick up this fall, says the managing director of Avison Young's Calgary office.
"Whenever you go through a period of slow activity, pent-up demand happens," Todd Throndson told the Calgary Herald. "People want to do things. There's a lot of money that's on the sidelines that is going to need to get active.
"Now it may wait as long as it possibly can before it gets active to see how far down pricing can go. But it's going to have to get active. Especially with the institutions. They are going to have to place that money into something."
Throndson made the comment following the release of Avison Young's latest Calgary investment report, which shows that overall transaction volume for office, retail, industrial, multi-family, industrial land and residential land was $842 million for the first seven months of this year with 68 sales.
The total is down$1.35 billion, or 62 per cent, from the same period in 2008. But Throndson told the Herald that investment activity will improve going into the fall as prices deflate a little and buyers indicated their willingness to pay slightly more.
"People are starting to move forward with what they think is the new reality in the world," he said. "I do think there's going to be more activity over the last four months of this year," he said.
Although the numbers are down year-to-date until the end of July, there are some positive aspects which indicate a healthy investment market, said Avison Young, including a high average price and few distress sales.
Peter Cuthbert, vice-president of real estate for Standard Life Investments Inc., told the Herald that more than five million square feet of downtown Calgary office space now under construction, including the Bow tower and Eighth Avenue Place, will create an over-supply situation. But, Cuthbert added, investors remain confident in the Calgary market.
"The interesting thing about Calgary is the stock of downtown core office is fairly tightly controlled by institutional players," he said. "So in a market like this, they're unlikely to sell out of it. The market's turned down. No one's quite sure what's going on and nobody's actually selling buildings in that segment, so how do you put a price on it?"
Standard Life, which has about 20 per cent, or one million square feet, of its portfolio staked in the Calgary and Edmonton markets, is actively pursuing acquisitions in Western Canada. He predicted the slowdown prevalent in the first half of this year will be temporary.
"We are pursuing opportunities," he said.
"Whenever you go through a period of slow activity, pent-up demand happens," Todd Throndson told the Calgary Herald. "People want to do things. There's a lot of money that's on the sidelines that is going to need to get active.
"Now it may wait as long as it possibly can before it gets active to see how far down pricing can go. But it's going to have to get active. Especially with the institutions. They are going to have to place that money into something."
Throndson made the comment following the release of Avison Young's latest Calgary investment report, which shows that overall transaction volume for office, retail, industrial, multi-family, industrial land and residential land was $842 million for the first seven months of this year with 68 sales.
The total is down$1.35 billion, or 62 per cent, from the same period in 2008. But Throndson told the Herald that investment activity will improve going into the fall as prices deflate a little and buyers indicated their willingness to pay slightly more.
"People are starting to move forward with what they think is the new reality in the world," he said. "I do think there's going to be more activity over the last four months of this year," he said.
Although the numbers are down year-to-date until the end of July, there are some positive aspects which indicate a healthy investment market, said Avison Young, including a high average price and few distress sales.
Peter Cuthbert, vice-president of real estate for Standard Life Investments Inc., told the Herald that more than five million square feet of downtown Calgary office space now under construction, including the Bow tower and Eighth Avenue Place, will create an over-supply situation. But, Cuthbert added, investors remain confident in the Calgary market.
"The interesting thing about Calgary is the stock of downtown core office is fairly tightly controlled by institutional players," he said. "So in a market like this, they're unlikely to sell out of it. The market's turned down. No one's quite sure what's going on and nobody's actually selling buildings in that segment, so how do you put a price on it?"
Standard Life, which has about 20 per cent, or one million square feet, of its portfolio staked in the Calgary and Edmonton markets, is actively pursuing acquisitions in Western Canada. He predicted the slowdown prevalent in the first half of this year will be temporary.
"We are pursuing opportunities," he said.
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