Commercial real estate investment in Vancouver has declined across all sectors except for office, according to a new report from Altus Group.
Overall, the first quarter saw 322 sales transactions for the Vancouver area, representing a 49 per cent decrease from a year ago and the lowest transaction volume in the last 18 quarters. The total number of transactions has also slowed from the pace of last year with a decline of 36 per cent from Q1 2018.
“The lowest transaction volume since Q1 2013 is reflective of the gap between vendor and purchaser price expectations and the lack of product, resulting in decreased market activity,” commented Paul Richter, Director, Data Solutions at Altus Group.
Notably, the residential land sector, which is typically Greater Vancouver’s strongest performing sector, had a slow first quarter. This reduction in activity greatly impacted the region’s overall performance.
For the first time in 13 quarters, residential land activity dipped under the $1 billion mark to just $446 million, representing a decrease of 68 per cent (in dollar volume) from the previous quarter and 66 per cent year-over-year. Transaction volume witnessed a drop of 35 per cent from Q4 2018 and 53 per cent from the same quarter last year.
Meanwhile, Vancouver’s industrial and retail sectors both experienced similar declines, with the latter recording 35 transactions worth $136 million — down 47 per cent in dollar volume from the previous quarter, and down 78 per cent from Q1 2018.
For its part, Vancouver’s office sector saw 26 deals take place in Q1 — up from 16 transactions in the previous quarter — making it Vancouver’s only net positive sector.
Cap rates
Overall cap rates for the greater Vancouver area remained relatively stable in Q1 Office, retail and industrial each settled at 4.0 per cent, while the apartment market is expected to decompress slightly to an overall average of 3.5 per cent.
The complete report can be found here: https://datasolutions.altusgroup.com/vancouver-investment-stats-q1-2019/
