Cap Rate Update
The on-going segmentation within the commercial real estate market in Canada, is a phenomenon which continues to be reflected by buyer sentiment, country wide.
In its recently released Q1-2016-CBRE Canadian Cap Rates & Investment Insights Report, CBRE identifies that “cap rates have moved up slightly in energy-centric markets and down, selectively, in British Columbia and Ontario”.
Across Canada, cap rates in the four major asset classes are stable, or increasing marginally. There remain, not unexpectedly, distinct local market differences. Vancouver continues to show strength in its core office market, with mid to low 4% cap rate activity. Vancouver also demonstrates significantly lower cap rates in the industrial market, than other major Canadian centers.
In the east, the Kitchener Waterloo market is demonstrating strength in the multi-family market, buoyed no doubt by employment gains in the tech sector.
Not surprisingly, sales activity in the office markets in both Calgary and Edmonton, reflect cap rates 200 to 300 basis points higher than in Vancouver. The report also observes that in Calgary “the office market has fallen out of favour with investors and there have been no office trades since the beginning of 2015”. READ MORE