TORONTO—Through the first half of the year, Canada has continued its run of strong growth, due in part to its conservative banking and lending practices and to Western Canadian growth by oil and gas firms.
Unlike the US, major Canadian markets are seeing massive amounts of construction in both office buildings and multifamily towers. Downtown Toronto has about 4.5 million square feet of new office space this year, with another eight million on the drawing board, according to a recent study by locally based Avison Young. In Alberta province, where the oil fields are, there is almost $208 billion in major projects either recently completed, under construction or proposed to start in the next two years.
Brett Miller recently left CBRE to become Chicago-based Jones Lang LaSalle's new president of Canada operations. "If any quality property in Canada becomes available, such as Scotia Plaza in Toronto, there's generally a competitive bidding environment," Miller tells REAL ESTATE FORUM.
Also in Toronto, Deloitte Canada has signed up for 420,000 square feet at a new office tower. With the lease in place, Toronto and New York City-based Brookfield Office Properties plans to develop the 980,000-foot Bay Adelaide Centre East alongside its West twin.
The city has only a 5.3% vacancy rate. "Strong fundamentals and low vacancy in Toronto's financial core signify the market's willingness to support new office development," said Jan Sucharda, president and CEO of Brookfield's Canadian operations.
Western Canada office product is also selling well. Bentall Kennedy has purchased the 33-story Bentall V tower in Vancouver for $396 million. Frankfurt-based Deka Immobilien was the seller.
Bentall CIO Paul Zemla tells Forum that the time was right to strike, since Bentall V is arguably the top building in Vancouver, at 100% leased. The local market is only 3% vacant. "There's just a very strong economy in British Columbia," he says.
The hotel market is faring well, too. Homewood Suites by Hilton, based in McLean, VA, is expanding rapidly in Canada, signing six properties this year. Bill Duncan, global head of brand management, tells Forum that another dozen hotels are in the works for Canada. "For whatever reason, Canada has turned into an amazing country for us; we're getting incredibly strong performance, with metrics much higher than US hotels," he says.
The country's success is even extending into seniors housing. Mississauga-based Chartwell Seniors Housing REIT recently sold six US properties totaling 1,221 living suites to Harvest Facility Holdings, a subsidiary of Holiday Retirement Corp., for $165.5 million. The sale is part of the firm's intention to focus solely on Canada.
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