Montreal-based Ivanhoe Cambridge, in partnership with American investors have purchased 73 research and office buildings for a sum of $800 million.
“This investment enables us to acquire a critical mass of assets in a rental market that is seeing one of the best growth rates in the United States,” said Bill Tresham, president of global investments with Ivanhoe Cambridge.
While the residential market in the U.S. has shown significant signs of recovery throughout 2012 and 2013, tensions over the fiscal cliff stifled the commercial sector’s ability to keep pace. But according to new numbers from Genesis Capital, as the first quarter comes to a close, signs of upward movement are there.
“In my view, we are now moving in a good direction,” said Terry Robinson, president of the company. “Vacancies are dropping, but very slowly. Rents are increasing, but just as slowly.”
Canadian investors have been exploring the U.S. commercial market in smaller numbers since the recession starting in 2008-2009, and according to John O’Bryan, chairman of CBRE Ltd., this interest is poised to accelerate in specific sectors.
“As you go forward, if you’re looking for prime assets, you’re not going to find them, the market has recovered there,” he said. “But there are still markets and development opportunities in particular where the lack of credit is still a problem for domestic players, so it is an opportunity for Canadian investors with very large balance sheets to get into the market.”
Bill Argeropoulos, vice-president and director of Research (Canada) at Avison Young Commercial Real Estate, believes cross-border commercial purchases will intensify in 2013. He credits a record year for Canadian commercial purchases and higher cap rates in the U.S. as reasons investors may want to look south of the border to diversify their portfolio.
“The wider spread in investment yields will intensify cross-border activity with more Canadian buyers looking for bargains in secondary markets, while others will continue to bid for assets in fortress or gateway markets, either alone or through joint-venture partnerships,” he says. “Canadian investors are positioning themselves as the U.S. market begins to move up the recovery curve.”