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Despite the pandemic wreaking havoc on commercial real estate properties worldwide over the past year and a half, things are getting back on track. Canadian CRE sectors like office and retail have suffered massive blows, but new reports indicate that the tides are turning.
In the second quarter of 2021 alone, investments in Canadian commercial properties have set an all-time high record of over $14 billion. Let's see what other positive investment news is out there.
Canadian investors are setting the pace
It comes as no surprise that Canada’s three largest cities saw the most investor activity in the second quarter. Toronto, Vancouver, and Montreal account for over $10 billion of the country’s $14 billion sales volume.
Metro Vancouver saw its sales volume rise by 26.4% compared to the last quarter and 54.4% compared to the past three-year average. In Q2 alone, Metro Vancouver had 473 transactions, amounting to $3.2 billion. Toronto’s deal volume hit $4.9 billion (vs. only $1.5 billion in Q2 2020), while Montreal’s was slightly over $2 billion.
However, these three cities were not alone. Western Canada also had some positive news. In the office sector, the Q2 reports indicate a quarter-over-quarter increase in investment activity in both the office and hotel sectors. In Western Canada, Colliers reported that 3Q vacancy rates declined for Saskatoon, Regina and Winnipeg markets and remained the same in Victoria. By all estimates, several markets throughout Canada are back at their pre-pandemic levels and have made a full recovery.
Industrial, multifamily, and ICI Land – the most attractive asset classes
Throughout the pandemic, industrial, multifamily, and ICI (Industrial Commercial Investment) asset classes have proven to be the most resilient, and investors continue to target them. Colliers reported in the third quarter that six of the seven markets in Western Canada all reported a decline in industrial vacancy rate.
As a whole the industrial sector saw $4.1 billion in transactions, multifamily $3.7 billion, and ICI $2.9 billion. However, for the first time in over a year and a half, we’re finally seeing the retail sector rebounding, as well, with deals amounting to $2 billion in Q2.
Altogether, the continued interest in the industrial, multifamily, and ICI and the newfound confidence in the retail sector are driving a significant surge in deals. Canada is well on its way to hitting $50 billion in CRE investments in 2020 – a new annual record.
Although COVID-19 still has not entered the rearview mirror, several Canadian CRE markets are quickly rebounding. With the expected transaction volume of over $50 billion by the end of the year, it’s evident that investor confidence is spiking back up and money will not continue to sit on the sideline.