Canadian Commercial Real Estate Deals Soar

Posted on 16. Aug, 2010 by in News

Steve Ladurantaye Real Estate Reporter, Globe and Mail Update  Published on Monday, Aug. 16, 2010 12:57PM

Canada’s commercial real estate market rebounded sharply in the first half of 2010, with the value of deals increasing by 60 per cent as the debt markets recovered from the recession.

Commercial real estate company CB Richard Ellis said in its midyear national investment report that $7.8-billion worth of deals were done from January to June, compared with $4.9-billion during the same period in 2009.

There were a total of 2,243 commercial deals done, compared with 1,565 at last year’s halfway point.

“It is important to note that midyear figures from last year were far lower than the historical average, due to the global economic crisis that characterized much of 2008 and 2009,” the report said.

“When comparing the current national midyear figure to midyear 2005 – a year more reflective of the country’s normal commercial real estate activity levels – volume is up by 22.8 per cent.”

Real estate investment trusts and local private investors handled most of the deals, CBRE said, adding that they “led the charge using available debt aggressively.” Foreign investors played a more limited role.

Buyers were active across the country, CBRE chairman John O’Bryan said. “Unique to this year is the fact that market activity is consistently up across all major cities – a trend that does not happen often,” he said.

Here’s a look at major centres, from the report:

Toronto

Toronto recorded the highest midyear commercial real estate activity volume of all major cities, with $2.9-billion in transaction volume, and 563 deals. Current debt levels and available capital gave the Toronto market a boost – factors that have been missing from the market since 2008’s economic downturn. The REIT and private investor groups have been particularly active in Toronto’s commercial real estate market over the past several months. As one of the last-standing tax shelters, REITs have been extremely active in the market since the recession occurred, and are benefiting from the economy’s rebound.

Vancouver

In the January-to-June period, 632 commercial real estate transactions took place, totalling more than $1.6-billion in volume. Market activity was up across the industrial, retail and multiresidential classes – a trend unique to this year. The greatest year-over-year increase was recorded in small to mid-size buildings, with the $5-million to $20-million assets receiving the most attention.

Montreal

The city continued to rebound positively in the first half of 2010, with increased market activity across all asset classes. During the first two quarters, 446 real estate transactions took place, totalling over $1.1-billion in volume.

Calgary

During the first two quarters, 188 real estate transactions took place, totalling more than $680-million in volume.

Edmonton

The commercial market recorded 161 transactions in the first half of this year, totalling $754-million.

Ottawa

The capital city continued along its steady and stable course, recording 83 transactions totalling $267-million in investment volume. Private Canadian investors accounted for the majority of the activity in the market, consisting mainly of small deals. Lack of inventory constrained activity in this market both for foreign and domestic investors. Ottawa’s commercial market activity is expected to remain dampened by the fiscal restraint program introduced by the federal government over the next four years.

Halifax

Halifax recorded significant deal flow over last year’s activity, with 32 transactions totalling $111-million in investment volume. Buyers continue to maintain a cautious approach, still feeling the after-effects of the recession and waiting to see how the rest of 2010 plays out. Private Canadian investors accounted for most of the activity, with the office and retail sectors seeing the highest transaction volume, at $33-million and $41-million, respectively.

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