An already low national multifamily cap rated nudged down a little further in the fourth quarter of 2017, largely attributable to an improving economy and demand for product in Calgary. Rates held steady in the other nine major markets CBRE analyzes, remaining at record lows in Vancouver, Toronto and Ottawa.

Nationally, the cap rate for Class A high-rise stock dropped below 4 per cent, to 3.96 per cent, while rates in Vancouver, Toronto and Ottawa were below the national average for Class A and B high-rise and low-rise stock. High-rise Class A stock in Calgary registered cap rates of 4.25 to 4.75 per cent, with Class B at 4.5 to 5 per cent.

Garry Beres, CBRE executive vice president in the Calgary market, points to a growing pool of private buyers chasing multifamily, retail and industrial properties. Continued potential for rent growth makes multifamily product attractive to investors at a time when the office and retail asset classes are seen to be in late cycle, suggests Paul Morasutti, CBRE’s executive vice president, valuation and advisory services.

“The hot condo and housing markets across the nation continue to make the increasingly affordable multifamily sector an enticing option for renters,” he adds. “As new supply continues to lag consumer demand, multifamily cap rates are forecast to remain low in 2018.”

As 2017 wrapped up, Vancouver sat at the low end of the national scale with cap rates for Class A high-rise stock in the range of 2.5 to 3 per cent. Even low-rise Class B stock was registering cap rates on par with the city’s downtown Class A office product, at 3.25 to 4.25 per cent.

Toronto’s Class A high-rise and low-rise stock commanded cap rates of 3 to 3.75 per cent. Class B high-rise and low-rise cap rates partly overlapped that range with cap rates of 3.5 to 4.5 per cent.