VANCOUVER-Interest rates in Canada have hit a “historic” low, according to the latest Commercial Real Estate Investment Review from Avison Young and office is the “most active” asset class. According to data from the firm, office buildings were responsible for 39% of total investment volume. That’s $5 billion worth of office property transactions. This figure is double what was reported in 2011, indicating a pretty good turn of events in the sector up north.
Asset pricing in Canada is up, says the report, and this can be attributed to increased competition for well-leased, top-notch properties in key markets. Toronto has been hot this year, with a record –for the city – $5.7 billion in sales. One significant transaction was the $1.3 billion sale of Scotia Plaza, located in the city’s financial core.
Of the market, Robin White, principal and executive vice-president, Capital Markets Group, in Toronto said in a statement: “Everyone wants to own a piece of commercial real estate in the largest and one of the healthiest markets in the country,” speaking to its current attractiveness.
Similarly, Vancouver is another great Canadian market, reporting the lowest cap rates in the country. Additionally, transaction dollar volume was up to $2.4 billion, the firm reported, and this was due in part to the $401-million Bentall V office tower deal.
“The continuing low interest rate environment and the lack of faith in sustainable stock market returns are driving many investors to further invest in public real estate companies, such as REITs or private limited partnership pools,” said principal Bob Levine, in the same statement. “The outcome of this trend is that going forward, there will be growing amounts of public or private equity available for investment,”
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