A Promising Phase for the Canadian Commercial Real Estate Market
1 min read
The Canadian commercial real estate market is expecting a promising phase driven by key economic indicators. Recent interest rate cuts from major central banks, including the Bank of Canada (BoC) reducing its policy rate to 4.25%, are influencing this shift.
As inflation slows, and labour market conditions become more favourable, there is increased optimism for Canadian commercial real estate investments. The improved market conditions are expected to increase transaction volumes throughout the remainder of the year.
The stabilization of capitalization rates (cap rates) for Canadian commercial properties is likely to encourage transaction activity as more investors enter the market, particularly in the second half of 2024 and into 2025. National office cap rates remain steady, while slight increases are observed in the retail, industrial, and apartment sectors. In the second quarter of 2024, demand for office space in Canada showed positive signs, indicating a balance of supply and demand. As the negative effects of remote work are beginning to ease, there is a rising preference for class-A spaces that offer amenities tailored for the hybrid work model.
Improved market conditions, stabilizing cap rates, and demand for office spaces are leading the Canadian real estate market into a new and promising phase with enhanced transaction activity and investor returns.
References
RENX. (2024, September 10). Entering into a new real estate cycle supported by continued housing demands: H2 2024 outlook. RENX. https://renx.ca/entering-into-a-new-real-estate-cycle-supported-by-continued-housing-demands-h2-2024-outlook-real-estate-market/
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