Com­mer­cial sales hit record in quar­ter

Calgary Herald - - FRONT PAGE - NATALIE WONG

TORONTO Cana­dian com­mer­cial real es­tate in­vest­ment reached new heights in the sec­ond quar­ter, boosted by a pair of big ac­qui­si­tions and by the lure of at­trac­tive, in­come-pro­duc­ing property.

Trans­ac­tions reached $16.5 bil­lion. That’s 38 per cent more than the previous record, set in the first quar­ter of last year, and more than twice the five-year quar­terly av­er­age, CBRE Group Inc. said in a re­port Mon­day. Deal vol­ume for the first six months was $26.8 bil­lion, a half-year record.

Two large pur­chases that closed in the sec­ond quar­ter dom­i­nated the ac­tion — Choice Prop­er­ties’ ac­qui­si­tion of Cana­dian Real Es­tate In­vest­ment Trust, and Black­stone Property Part­ners’ pur­chase of Pure In­dus­trial Real Es­tate In­vest­ment Trust. To­gether the deals ac­counted for 45 per cent of the to­tal.

Sin­gle-property pur­chases in­cluded Hines and Oak­tree Capital Man­age­ment’s $107-mil­lion pur­chase of the First Tower of­fice build­ing in Cal­gary and Ti­gra Vista Inc.’s $256-mil­lion ac­qui­si­tion of Toronto’s Park­way Place. The av­er­age deal size was $9.4 mil­lion, up 67 per cent from a year ear­lier.

“What in­vestors really want to­day, as we get longer into the cy­cle, is great real es­tate that will stand the test of time,” Peter Senst, pres­i­dent of Cana­dian capital markets at CBRE, said in an in­ter­view. “On top of that, you’ve got term and covenant, so if the mar­ket does change, you’ve got some­thing that can pay out div­i­dends for an ex­tended pe­riod of time.”

Toronto ac­counted for more than a third of all trans­ac­tions in the quar­ter, at $5.7 bil­lion. That’s the city ’s high­est quar­terly in­vest­ment vol­ume ever and 20 per cent more than the previous record, set in 2013. Van­cou­ver had more than $3.2 bil­lion in trans­ac­tions, nearly dou­ble its five-year av­er­age.

Toronto and Van­cou­ver have had the two tight­est down­town of­fice va­cancy rates for four quar­ters in a row and the two low­est in­dus­trial avail­abil­ity rates for six con­sec­u­tive quar­ter sin North Amer­ica, Senst said in a state­ment.

Apart­ment-build­ing deals also per­formed well, with $1.9 bil­lion in trans­ac­tions, 40 per cent more than in last year’s sec­ond quar­ter.

Still, ris­ing in­ter­est rates and stricter mort­gage rules are set to cool home sales and price hikes, ac­cord­ing to a Reuters poll of property mar­ket an­a­lysts re­leased Mon­day.

The me­dian forecast in a Reuters poll of 16 an­a­lysts taken Sept. 4-7 pre­dicted na­tional house prices will rise by a me­dian 1.7 per cent this year, slower than the 1.9 per cent in a poll taken in June.

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