Canadian commercial property sales are on track for a new record this year. Could rising interest rates drive even more activity in 2017?

1. Rising interest Rates Could Create Record
Year For Commercial Property Sales In 2017
Canadian commercial property sales are on track for a new record this year. Could rising
interest rates drive even more activity in 2017?
The latest data from the Financial Post and CBRE shows that Canadian commercial real
estate sales hit a new record in Q3 and could beat the standing 9 year high of 2007, by the

2. end of the year. New rate hikes may create even more demand in this sector over the
coming months.
Third quarter sales of Canadian retail properties, office buildings, apartments, and other
commercial real estate topped $11B during the three months ending in September.
Estimates put the full year at over $35B in transactions. Experts credit this new push with
need for yield, and a combination of investors seeing sustainability in growth thanks to a
diversified economy, and rebounding energy markets.
Some of the biggest jumps in commercial property sales have been seen in:
 Toronto
 Vancouver
 Calgary
 Edmonton
Sales shot up 146% in Calgary, and 55% in Edmonton.
A new U.S. Federal Reserve interest rate hike was introduced in December 2016. The Fed
is also calling for 3 more rate hikes in 2017. The Globe and Mail warns that this is likely to
spill over across the border and lead to higher mortgage rates and costs for Canadian
homeowners and buyers. The report urges borrowers to speed up the refinancing process
and get ahead before bank lift rates.
A decrease in profitability of investing in residential properties could shift more investors to
invest in the booming commercial property market. There is certainly a sense of urgency
about locking in to solid assets, which offer good yields, and before prices and rates rise.
Once the bustle of the holiday season slows down we could see much more activity.
Figures show that investments are being made almost equally between several groups with
foreign investors slightly in the lead for deals above $10M. That’s followed by private
investors in Canada, and pension funds. Foreign investment alone rose 22% in the last
quarter. Thankfully private investors have been able to gain traction and access great
opportunities by collaborating and partnering together on larger deals than they could take
on alone.
Summary

3. This year has proven to be a record and expectation setting year for Canadian commercial
property. Rising interest rates south of the border could begin impacting Canadians in 2017.
That is only likely to speed up the action as investors rush to beat the market and
competitors for the best acquisitions. Fortunately private domestic investors don’t have to
be left out of the best opportunities and yields if they find the right vehicles to invest through.