Q3 Key Trends in Canadian CRE Investments
2 min read
The latest results from Altus Group’s Canadian Investment Trends Survey (ITS) offer valuable insights into the current commercial real estate landscape in Canada and several key trends that have emerged in the third quarter of 2024. Below is everything you need to know.
The Overall Capitalization Rate (OCR) in Q3 2024 remained stable, increasing 30 basis points to 5.90%. The residual impact of rising interest rates and the price gap between buyers and sellers has been reflected in fewer transactions in commercial real estate.
A weakened labour market is observed through the continuous downward trend of job vacancies, making it extremely difficult for people seeking employment. While year-over-year unemployment increased by 23% in August of 2024, the unemployment rate decreased by 0.1% to 6.5%. September 2024 saw a slight increase in employment by 0.2%, suggesting potential stabilization in the labour market.
With inflation reaching the Bank of Canada’s two percent target, interest rate cuts will likely continue. The reduced borrowing costs are expected to stimulate commercial real estate activity through improved investor confidence and more favourable market conditions.
In the third quarter of 2024, Toronto fell to fourth place, with Vancouver, Calgary, and Edmonton now being the top three preferred markets for investors. Regarding preferred property types in Canada, food-anchored retail strip, multi-tenant industrial, and suburban multiple-unit residential, are thriving investment types. In Toronto, multi-tenant industrial and food-anchored retail strip show the most positive momentum, indicating more investors are looking to purchase than sell.
Altus Group’s Canadian Investment Trends Survey insights reveal a transitioning commercial real estate market. Enhanced market conditions suggest potential opportunities for increased activity in the future.
References
Wong, R., & Nhieu, J. (2024, October 22). Canadian CRE Investment Trends - Q3 2024: Altus Group insights. Canadian CRE Investment Trends - Q3 2024 | Altus Group Insights. https://www.altusgroup.com/insights/canadian-cre-investment-trends/
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