Sales of Multi-Suite Residential Rental Properties Sustained Record Pace in Second Quarter of 2019
According to the latest Canadian Economic Outlook and Market Fundamentals Report by Morguard Corporation, the pace of commercial investment property sales picked up at the end of the second quarter and the multi-suite residential rental sector was the strongest contributor to the record transaction activity.
“Investor confidence in property sectors with strong historical performance, apartments in particular, has been demonstrated recently with sales activity remaining at the record high despite growing economic uncertainty,” said Keith Reading, Director of Research at Morguard. “Investors are looking for safer investments as they become more cautious and question where Canada and the United States are situated in their respective economic cycles.”
In the multi-suite residential rental market, Morguard Corporation says investors looked to increase their exposure to sectors that had performed relatively well during times of economic weakness. Investment in the sector surpassed the $2.0 billion mark.
In the office leasing space, the Canadian market was sustained through to the end of the second quarter.
Technology-based businesses and shared workspace companies remained at the forefront of Canada’s office space demand cycle and the challenge of finding available properties sharpened the focus on fewer high-quality assets available.
After seeing single-digit vacancy levels for more than 15 years, the retail industry has continued to post double-digit vacancy levels since the end of the third quarter of 2018.
“As the late stages of the Canadian commercial investment property cycle continue throughout 2019, investors will try to balance capitalizing on late-cycle growth and increasing positions in assets that offer greater downside protection,” said Reading.
Morguard Corporation states that the Bank of Canada’s decision to maintain the overnight rate at 1.75 per cent in July helped to maintain investor activity and appetite for real estate across property asset classes.
Despite growing economic uncertainty – as the ongoing trade conflict between the U.S. and China continued to have a negative impact on the global economy – investor confidence in the commercial real estate sector remained strong in the second quarter of 2019.
In the same period, the national unemployment rate fell to a near four-decade low as a result of April’s surge of 106,500 new positions, further stimulating overall investor and business confidence.