The Canadian commercial real estate market has experienced healthy levels of investment activity thus far in 2013, according to statistics from CBRE’s Canadian Investment MarketView report.
Though activity was down 6.5 per cent from the second half of 2012, it was just 0.7 per cent behind the first half of that year. The report shows the transactions were split relatively evenly across the real estate sectors, with office, industrial, retail and multi-residential markets recording 22.4 per cent, 20.4 per cent, 19.2 per cent and 19.2 per cent of total acquisitions, respectively.
In the first half of 2013, $4.7 billion of Canadian commercial real estate traded hands, comparable to the $4.8 billion in the first half of 2012. There continues to be a pool of ready buyers as property comes onto the market.
The report indicates REITs have been more conservative for much of the year, with acquisitions accounting for 29.3 per cent of the commercial real estate investment volume as of mid-year 2013, compared to 48.2 per cent of volume in the first half of 2012.
“Investors exhibited a lot of poise and understanding of the market over the summer. Most appear to have processed recent events and are ready to move forward,” says John O’Bryan, chairman of CBRE Ltd. “Total investment volume is up year-over-year and the outlook remains cautiously positive.”
Private equity and pension funds have been purchasing quality assets. Private investors outspent all other buyers in four of the last six months. As a result of REITs taking a step back, pension funds have mobilized their spending and are dominating the market, with acquisitions across the country in June.
“The pool of buyers for Canadian commercial real estate is deep and this period of opportunity is not being overlooked by those who struggled to compete with the REITs last year,” says O’Bryan. “If anything, it is now a more even playing field but there is no shortage of competition for quality assets.”
CBRE initially estimated that the Canadian commercial real estate investment volume would reach between $24 and $25 billion in 2013, but that forecast has been revised to upwards of $26 to $27 billion for the year. While year-end volume is still predicted to fall below the $30.5 billion recorded in 2012, the total forecast for 2013 would be the third highest year-end volume in Canadian history.
