Big Capital Continues To Chase Canadian Business & Retail Opportunities

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Capital and investment in Canadian business and retail properties continues to be plentiful. Economic growth is projected to remain strong in 2017, due to expansionary fiscal policy, gains in household wealth and the resumption in business investment. These trends are positive, per new economic data and recent real estate transactions. The sales transactions show a hot housing market trending alongside a strengthening labor market. The economic data also shows Real GDP rising and big capital being invested heavily in Canada’s entrepreneurs, businesses, and commercial properties, and it seems to be paying off well for the investors, as indicators of future investments remain strong.

 

Venture Capital

The Business Development Bank of Canada (BDC) loaned 37% more to businesses and entrepreneurs during the 12 months ending in March 2017. Those funds went to 17% more clients, totaling $6.6B. This augmented the approximately $3.2B in Canadian VC money invested. That was up 41% year over year, the most since 2001. This year, 2017, kicked off strong as well with $905M invested in 98 deals, according to the Canadian Venture Capital Association. The BDC reports strong profits on investments at $464.8M for the fiscal year ending in the first quarter of 2017.

 

Mortgage & Retail Banking

The Canadian Imperial Bank of Commerce (CIBC) and Royal Bank of Canada beat analysts’ expectations in their last reports. This is in part credited to a 13% increase in mortgage business, to almost $200B. CIBC also credits much of its growth to its retail and business divisions.

 

Real Estate Sales & Performance

The strength of retail banks and new Canadian startups have certainly helped the retail property market as well. Both have played key roles in bolstering commercial real estate profitability, occupancy rates, and performance. ReDev Properties Ltd. was in the news again in August 2017 for another successful shopping plaza sale this year. This latest transaction was for the Daly Grove Centre in Edmonton, Alberta. The property with its 33,000 plus square feet of rentable space boasts a mix of national and local tenants, and is full leased. Other sales by ReDev this year include Whitemud Crossing in Edmonton and Inglewood Towne Plaza in St. Albert. The Canadian investment firm is also currently in the process of upgrading Rockwood Square in Calgary.

 

Summary

Strong investment levels continue to flow into Canadian businesses and retail shopping plazas in 2017. These investments appear to be paying off very well for both lenders and investors. Anticipations are that these trends will continue to grow, at least in Alberta, which still offers good value, growth, and sustainability for investors and financiers. The optimism this is injecting into the market and the economic benefits of a more robust startup scene could accelerate these trends in the next couple of years as well.