Capitalization Rate Trends And Where They Are Heading
1.7 min
As society continues to adjust to our newfound normal, capitalization rate trends remain unpredictable. According to Q4 statistics by CBRE, the retail, office and hotel sectors have seen a surprising upward trend, despite concerns of an imminent decrease in value. Industrial and low-rise residential properties took a hit, dipping below five and three percent.
Investors are looking past the economy's current state and into the future, as demand is expected to skyrocket post-pandemic. Mathew Burnett, Senior Vice President of Health Care Capital Markets at CBRE, states, "It's expected that 2021 will bring significant capital flows beginning as early as Q2 2021 as groups mobilize early to not miss out on the recovery and to take advantage of all-time low-interest rates. This increased demand, together with the downward pressure on development returns, suggests there may be room for cap rate compression in 2021."
Many Canadian cities saw a fluctuation in profitability during the last quarter of 2020 and were forced to adjust business models to stay afloat. Hopes for an economic upturn remain, as capitalization rate trends predict a steady increase in interest amongst critical players in every sector.
Learn more about Q4 capitalization rate trends.
Reference
Q4 cap rates trends vary by sector - remi network. (2021, February 17). Retrieved March 19, 2021, from https://www.reminetwork.com/articles/q4-cap-rates-trends-vary-by-sector/
About Royal LePage Commercial Westhaven
Our commercial real estate industry and segment expertise coupled with Royal LePage’s national platform and integrated systems provides best-in-class real estate strategies and a competitive advantage that can’t be beat.
We help businesses identify opportunities and maximize their return on investment with actionable goals, centralized support services and a strong commitment to customer success. Our national partnerships help us establish, guide and execute successful business investments.
We offer commercial real estate agents a professional environment, focused 100% on commercial real estate. Agents can expect unlimited market boundaries to build their business without the interference of a heavy corporate structure. In addition, agents will be able to access Royal LePage’s national referral network of over 18,000 agents to develop more business in their target markets with incoming leads generated daily. The brokerage provides agents a suite of services including marketing, promotional, networking and professional development needs.
Innovation and service excellence have developed and propelled the Royal LePage brand since 1913. When you join Royal LePage Commercial Westhaven brokerage, you have the backing of one of the most powerful commercial real estate services company in Canada—Bridgemarq Real Estate Services Inc. (formally Brookfield Real Estate Services Inc.). Bridgemarq is a leading provider of services to real estate brokers and agents. They are an affiliate of Brookfield Business Partners, a business services and industrials company focused on owning and operating high-quality businesses and is listed on the New York and Toronto stock exchanges.