Commercial real estate investment across Canada continues to grow, a BMO Economics report notes, in part due to the high number of investors seeking out income-generating assets.
According to the financial institution, CRE supply is dwindling nationwide, with many investors looking to take advantage of low loan rates. Developers are benefiting from this considerable rise in CRE construction, with many firms' balance sheets showing strong performances this year.
Earl Sweet, Senior Economist and Managing Director of BMO Capital Markets, stated CRE development has hiked at a rapid pace nationwide in recent years thanks to improvements in nearly all areas of the industry and many facets of the economy.
"Higher occupancy - spurred by steady growth in employment, manufacturing, wholesaling, and retailing - is reducing office, industrial, and retail vacancies, while lease rates are edging upward," said Sweet. "Meanwhile, large U.S. retailers are targeting what they view as the underserved Canadian market for expansion."
Investment may keep improving down the line, as a CBRE reports the national average cap rate decreased to 6.33 percent in the second quarter - a marked dip from 6.46 percent during the first three months of 2012.