The biggest among them include Oxford Properties now focused on a $15 billion New York project, but other small players are just as keen on the U.S. commercial space.
Douglas Crawshaw, senior investment consultant at Towers Watson told the Financial Times this week that commercial property is an increasingly attractive option for pension funds, including a growing number in this country.
“Real estate that is classified as ‘good secondary’ provides an attractive long-term investment for pension funds, particularly if they are able to negotiate rent increases with tenants or extensions to existing leases,” he says.
Canada’s pension providers may be heading south - but should investors follow suit?
Market studies and projections suggest commercial is recovering ahead of the residential market, and according to a research report from Marcus & Millichap Commercial Real Estate Investment Services, investor confidence returned to the commercial market in late 2012. In their most recent survey, the Investor Sentiment Index hit 166 – the highest level since 2004.
“What is also notable is that investment sentiment did weather a strong jolt when the U.S. debt downgrade occurred in August of 2011,” says Hessam Nadji, a senior vice president and managing director at Marcus & Millichap. “Now that we are six months beyond the debt downgrade, all of those fears that we were going into a double-dip recession and the sky was falling were not validated at all by commercial real estate investor sentiment—and they turned out to be right again.”
Retail has shot up to the peak levels reached in Q2 of 2011, and is a commodity that will always remain popular – and profitable – according to Bill Rose, National Director of Marcus & Millichap’s National Retail Group.
“Retail is in a constant state of reinvention,” he says. “Better than expected retail sales and bottoming of the housing market bode well despite high gas prices.”
The fiscal cliff agreement spared the real estate market, extending tax relief for mortgage debt forgiveness in a bid to reduce the number of foreclosures. This, combined with Canada’s high commercial prices and a degree of uncertainty in European markets, could suggest the U.S. commercial sector may finally have a chance to shine.
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