Steadily Strong Commercial Sector in Canadian Real Estate Expected for 2017
Morguard Corporation, a top property management company in North America, releases a new report citing the commercial real estate segment in Canada for continuous reliability and stability, particularly in investment. This sustainability is expected if the recent trends in the real estate sector remain consistent for the rest of the fiscal year.
The report highlighted a prediction of a steady and strong commercial sector, especially in the office asset class with an estimated $2.0 billion closing volume for the second quarter of 2017. More than $1.0 billion is expected for the industrial and retail segments each. The prediction is poised in spite of the strong national economy that leads toward interest rate boost.
According to Keith Reading, Director of Research for Morguard Corporation, the second consecutive quarter of the year is deemed much stronger than the expected economic output. Moreover, the projected 2017 growth already exceeded the 2016 levels that also show the winding down of monetary stimulus in a global scale. Reading further states that the perceived increase in interest rates in the United States did not affect the low inflation pressure, which serves as a shield against monetary policy change in the succeeding period.
Canada remains a stable and appealing choice for investment, a phenomenon that leads to more demands in the commercial real estate segment in the country, thus outpacing the supply. Changes that are attractive to investors gradually take place even if there is an expectation for interest rates to skyrocket. The rest of 2017 will also see little variation in terms of the Canadian property market’s strength.
Despite the latest cool down efforts, some signs of revival were already seen in historically hot markets such as Toronto, British Colombia, and Montreal. The rising interest rates also act as a defense against the imbalance in the housing market in the future on a long-term basis.
There are low office vacancy rates on a nationwide scale for the second quarter of 2017 and this is mainly due to the record-low vacancy levels specifically in the downtown sub market in Toronto as well as the declining rates recorded in Montreal and Vancouver.
A strong office occupancy rate was slightly blocked in Edmonton and Calgary due to a continuous weakness in the extended oil sector. The same trends were also seen particularly in the industrial segment that has low national vacancy rates even with higher vacancies recorded in two population centres based in Alberta.