TORONTO-The saying goes something like, “When the United States gets a cold, the world gets pneumonia,” or when we sneeze the world gets a cold, etc., though that theory is out there a number of different ways. However, Canada has seemed to do something spectacular in the past couple of years – stay healthy while the rest of the world got sick.
In 2010 and continuing throughout 2011, Canada continued to enjoy stability and growth while the United States bumped along from progress to uncertainty, according to a recent 2012 commercial real estate forecast report put together by Avison Young.
For example, Bill Argeropoulos, VP and director of research for the company, said in the report that the overall office vacancy rate in Canada’s core markets is now 7.6%, about half the 15% average office vacancy rate in the United States. Whereas there’s relatively no new US office development even discussed (to the prayers of suffering landlords), Canada’s leasing markets have seen a swift recovery to the point where new development, particularly office, is either underway or announced in most markets, Argeropoulos said.
This disparity is similar in the industrial markets. Vacancy declined in Canada’s industrial markets to 4.9% by the end of 2011, again almost half the 9.7% rate in the United States. “This is a clear sign of the different pace of recovery seen in the two countries,” Argeropoulos said.
Mark Rose, Avison’s CEO, tells GlobeSt.com in a private interview that both the US and Canadian markets should see upward trends this year. “I think we’ll see more of what we saw in 2011,” he says. “In Canada, the oil and gas areas in the western provinces are doing well, and so are financial centers like Toronto. Assuming less drama in the world, I’m thinking of Europe here, the US economy hopefully looks like it will get stronger.”
He credits Canada’s richness in resources, and its fortuitous decision to stay out of the sub-prime housing markets and bad debt, for its ability to keep afloat during tough times for the rest of the world. However, the country still sees a need to buy US property. “Given the relatively small investable universe in Canada, we continue to notice a growing trend of Canadian buyers heading south of the border,” Rose says. “While US assets are current available at more attractive pricing, their value is expected to rebound in the coming years.”
Rose says even the uncertainty about the US election shouldn’t derail an uptrend for the country. Even with Pres. Barack Obama lacking a pro-business platform, the United States has bounced along the bottom and not fallen through, he says. “The confidence of decision-makers has been at such a low level that even if things stay the same, business should improve. If a pro-business administration was elected, you would probably see the economy set off like a rocket ship.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.