Confidence remains high for Canadian commercial real estate

The survey, done by the Real Property Association of Canada (REALpac) and FPL Advisory Group, measures market trajectory on a scale of 0 to 100, so a score above 50 reflects positive trends. In the previous quarter, the score was at 70.

This past quarter marked the eighth straight that the index was in positive territory.

For the current quarter, the index score was 71, and the future index is 61, meaning that the executives see a slight softening of the market ahead, but still in positive territory.

“The market is largely viewed as stable and attractive, which bodes well for future investment and development,” said the report. “Ultimately, the recovery Canada has experienced is now maturing.”

The U.S. market got a score of 68 on its future index, meaning respondents saw more room for improvement there. The overall U.S. index score was 69 this quarter, down from 77 the previous quarter. The U.S. index score was once as low as 17 in 2008 for current conditions.

Commercial real estate asset prices continue to rise in Canada, with 87% of respondents reporting increased values over the past year. Yet 55% said they expect flat pricing going forward, and 12% see a mild decline ahead.

Respondents pointed out cap rates are at an all-time low and a limited supply throughout the country was pushing prices up considerably.

“There’s a shortage of commercial product for sales, so as a result, cap rates are low,” said one respondent. “People are looking to buy and it’s definitely a seller’s market.”

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