According to CBRE Canada’s Q2 2019 Canadian Cap Rates & Investment Insights report, the Canadian office market rebounded in Q2 2019, while industrial fundamentals continued their run as every key metric strengthened.
Investment activity accelerated in Q2 with “blockbuster transactions” closing in Toronto, Vancouver, and Montréal.
“Despite the late 2018 market turmoil, pricing of office assets has remained resilient,” said CBRE Canada.
Montréal was the only market to report movement in yields, where Suburban Class A cap rates increased by 12 bps.
The report states that investor interest continues to be centered on high quality downtown office assets, and liquidity for this property type has remained plentiful.
Demand from tenants and growing economic tailwinds, including the continued expansion of ecommerce and a stabilizing import/export landscape, are expected to stay afloat.
Industrial cap rate movements were minimal in Q2 2019. Victoria and Edmonton were the only markets to record changes in yields where Class B cap rates compressed by 25 bps in Victoria, and Class B cap rates rose by 25 bps in Edmonton.
“While investor demand continues to outstrip supply, a swelling construction pipeline may provide new opportunities in the not-too distant future,” said CBRE Canada.