Investment volume in Canada’s commercial real estate market is poised to match or exceed 2012’s record of $28 billion with pension funds likely to make acquisitions, according to a report by Avison Young.
Canadian real estate investment trusts (REITs) may be more discriminating in their acquisition choices in Canada in response to interest rates, says the company’s chair and CEO, Mark E. Rose.
“Nevertheless, pension funds, life insurance companies and private equity players are poised to fill the void, should REITs take a step back,” he adds.
According to the report, healthy market fundamentals continue to drive investment activity in Canada.
Slightly more than $14.4 billion worth of commercial real estate assets (office, industrial, retail, multi-residential and land, greater than $1 million) changed hands in the first half of 2013—up $1 billion, or 8%, compared with the same period last year.
The report notes that Ottawa continues to be a safe haven for pension fund advisors, REITs, financial institutions and other institutional investors looking for stable long-term yields.
Investors’ assets of choice continue to be office buildings—although the industrial market is ahead of 2012 levels as it remains popular with institutional and private local investors.
Notable transactions across the country include the Canada Pension Plan Investment Board’s (CPPIB) purchase of two downtown Toronto’s properties for $220 million from the Ontario Pension Board and Oxford Properties Group’s sale of a 50% interest in Upper Canada Mall to the CPPIB for almost $252 million.
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