A slowdown in retail real estate activity has exacerbated flat growth for the CRE sector.
The British Columbia Real Estate Association’s Commercial Leading Indicator (CLI) for the third quarter shows no significant change from the previous quarter and a 1.3% gain from Q3 2017.
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Weak retail sales (down 2.3% quarter-over-quarter after adjusting for inflation and down 1.8% year-over-year) and reduced manufacturing shipments weighed on the CLI while increased office-based employment (up 14,000 quarter-over-quarter) and a slightly more favourable financial environment helped mitigate the weakness.
The gains in office employment pushed the CLI measure for this sector to a record high and, if the trend continues, would mean an increased need for office space in the future, leading to increased investment and leasing activity in the office sector.
“Slowing activity, particularly in the retail sector, led to a flattening of the CLI last quarter,” says BCREA Deputy Chief Economist Brendon Ogmundson. “A flattening index tends to point to a slower, yet still positive growth environment over the next year.”
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