Commercial investment market to grow in 2015

For investors looking for money partners in the commercial space, 2015 could be the year to find your match, as a new report says an ‘unprecedented’ wave of investment capital is flowing into the sector across major Canadian markets.

But one investor and commercial broker points out that this phenomenon has been happening for the past seven or eight years, and increasingly so in the last two or three years.

“I don’t see a slowing down of the influx of foreign capital, but I also don’t see any reason for it to explode,” says Claude Boiron, an investor and commercial real estate broker with Royal LePage Terrequity Realty. “It’s already at very high levels.”

CBRE’s report, 2015 Canadian Market Outlook: Commercial real estate trends and drivers in 2015, which was published Monday, says: “While many Canadians have been fixated on residential real estate, the commercial property market is now poised for rapid expansion and potential transformation.”

According to the report, new players, capital sources and heightened scrutiny will be important factors in the year ahead for commercial real estate investors.

“Real estate has a larger role than ever before in many investment portfolios,” says Peter Senst, CBRE’s president of Canadian capital markets. “The challenge is finding a home for all this capital.”

The report says that, in 2015, investors will continue to focus on core, quality product in Canada’s largest cities. But investors will increasingly turn to construction, increased density and repositioning to achieve an asset’s highest and best use.

“New construction and redevelopment are two of the ways that investors can execute their core investment strategies and be successful in the hunt for yield,” says Senst.

“The report is dead-on with the way that supply chain is affecting real estate. Industrial is becoming more and more exciting,” adds Boiron.

“The influx of foreign capital is phenomenal and it is completely changing the landscape of how developers are thinking, as well as keeping cap rates low and even sending them slightly lower each year.”

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