The likelihood that interest rates are going to rise continues to be a top concern for owners and investors, according to Colliers International Canada’s Q2 2013 Cap Rent Report.

The survey overall indicates a stabilization of expectations for returns on real estate assets throughout Canada.

Cap rates have had ample time to adjust to current economic conditions and ongoing low interest rates. Despite this general stabilization, there were some notable changes of cap rates from the first quarter to the second quarter of 2013.

For the most part, through the first two quarters cap rates for office products remained consistent across the country. There were some changes, notably, the increase in minimum return expectations in Ottawa of 0.5 per cent for Class B downtown office and suburban office products.

The survey shows cap rates are expected to remain consistent. Fundamentals in Canadian real estate remain strong with most markets demonstrating relatively low vacancy and stable rental rates.

Most investors are anticipating an eventual rise in interest rates, though the timeline for this to occur still remains unclear. The Bank of Canada has held the policy rate at one per cent since September 2010 and, based on recent comments from Bank of Canada governor, Stephen Poloz, there seems to be limited potential for interest rates to rise in the short-term. Existing cap rates evident in the survey seem to indicate that most owners are confident low interest rates will remain for the foreseeable future.