Investment activity in Canada’s commercial real estate market tipped over $13 billion during the mid-quarter, down 10 per cent from the first half of the previous year.

Yet, according to the recent Avison Young Fall 2014 Canada, U.S., U.K. Commercial Real Estate Investment Review, the slight dip resulted not from lack of demand, but rather from investors capitalising on higher quality assets in the U.S.

Manhattan and Boston are the two most popular markets driving action south of the border, and a major portion of an American investment sum of $5.4 billion. These cities promise higher income growth.

But another factor halting domestic activity is investors looking for other growth opportunities within Canada.

Bill Argeropoulos, vice-president and director of research (Canada) for Avison Young, points to alternatives like redeveloping existing assets for upping value or developing new properties that power higher yields.

However, according to Argeropoulos, sales performance across Canada’s major markets isn’t so glum when figures are put into perspective.

“The $13-billion worth of commercial real estate assets that changed hands in the first six months of 2014 exceeds the slightly more than $12 billion that traded in the whole of 2009 – the trough for sales at the peak of the credit-crisis,” he reports.

Argeropoulos adds there is still demand for worthy assets across Canada, but some owners are more selective, waiting for better quality before selling, while others are focusing on culling assets to strengthen operations or enhance value.

Overall, the market report states office buildings were pegged as more valuable over other assets at a dollar volume of $3.3 billion, while multi-residential units, although highest in Montreal, recorded the lowest sales at $1.8 billion, followed by industrial.

But it was retail space which saw the most improvement compared to 2013, up 25 per cent at $2.9 billion. The $505-million sale of Bayview Village Shopping Centre in Toronto, also Canada’s biggest deal to date this year, helped increase this tally. Land sales, on the other hand, fell 13 per cent to $2.8 billion.

Although Toronto topped the list of highest recorded sales during the period at $5.6 billion, particularly in retail and large office space, sales weakened relative to the first half of 2013 with a 14 per cent dip.

Vancouver, however, improved more than any other market. Possible factors include the doubling of multi-residential assets and the completion of the country’s largest industrial deal this year—South Burnaby Corporate Centre at $48 million.

In Ottawa, vacancy rates continue on an upward trajectory in the downtown area, with an overall drop in the majority of asset classes. However, the first half of 2014 remains stable. The Kanata submarket is particularly active with Spear Street Capital’s purchase of the Blackberry portfolio, along with a few other developments.

Montreal’s market performed well with a total of $1.4 billion in sales, but declined 20 per cent compared to the same six months of 2013. Still, a noteworthy transaction was the sale of the Holiday Inn Montreal Midtown to N-HIM Sherbrooke Properties for $63.5 million.

In Alberta, Edmonton recorded the third largest sales in Canada, exceeding Calgary by $300 million. Land sales propelled Edmonton’s number upwards, mainly due to the secondary boom of apartment and condo construction projects meeting the demand of downtown development. Several groups bought land or parking lots with the intention of building more than 2,500 units.

Overall, assets are strong in Edmonton with low vacancy and consistent rental-rate growth driven by Alberta’s sizzling economy.

In Calgary, while multi-residential transactions have been scare, companies are now developing new multi-purpose rental properties. Although Calgary experienced a $700-million drop from last year, retail assets are an exception.

Retail transactions totalled $181 million from January through June 2014—more than double the $88 million invested during the same period in 2013.

Such notable highlights from the Avison Young report add perspective to the market drop during the first half of 2014. Looking forward, Argeropoulos offers some hope.

“The second half of 2014 looks promising for Canada,” he says. “Since we compiled our mid-year 2014 Canadian investment sales figures, assets valued at more than $7 billion have been sold, put under contract or listed for sale—and those completed or pending transactions exclude any off-market deals underway.”