May 24, 2024

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Vancouver No. 1 Canadian for real estate investment: Altus

2 min read

While sentiments towards investment are rosy, the dollar volume of transactions fell by nearly half in 2023

Investor appetite in Vancouver commercial real estate remains hearty, despite some economic indigestion last year.

Vancouver ranks as investors’ top Canadian market, with Toronto in second and Ottawa in third, according to a new report from research firm Altus Group.

Investment volume across all commercial property types in Vancouver totalled $8.4 billion in 2023, down nearly half (48 per cent) from a year prior.

Despite the drop, the March 21 report described investors as “cautiously optimistic.”

Tony Quattrin, vice-chairman of capital markets for real estate company CBRE, described appetite to invest in Vancouver as “the strongest of all of the markets in Canada.”

“That’s primarily because our fundamentals across all asset classes are the strongest. In other words, our vacancy rate, our rental rate structure … is just better,” he said.

“Our supply is less and our values here, they didn’t fall as much as they have in the rest of Canada. We have a lot of people selling here because they can retain value.”

While Vancouver’s position within the Canadian investment landscape is positive, a challenging economic environment put downward pressure on investment transaction activity in the city last year.

“A nationwide slowdown in investment activity was observed due to higher interest rates and inflationary pressures. Across Vancouver, investors exhibited purchasing motivations similar to those of the previous year,” said the report.

“Looking ahead, with the anticipated interest rate cuts in the second half of 2024, investors have remained optimistic for a potential rebound.”

The industrial market accounted for $2.6 billion in transactions in 2023. This is down four per cent from 2022 totals and represents the highest investment across all property types. 

Vancouver’s industrial availability rate reached 3.1 per cent in the final quarter of last year. Of the 633,546 square feet of new supply on the market, 77 per cent is pre-leased. In addition, there is 3.5 million square feet of new supply under construction with 61 per cent pre-leased.

The retail market accounted for $968 million in transactions, down 49 per cent when compared to 2022.

The report highlighted phase two of the Amazing Brentwood, Lougheed Town Centre and Oakridge Centre as notable retail projects to watch.

“Both of those asset classes, retail and industrial, take a lot of land to build,” said Quattrin.

“Because you can’t deliver a lot of supply, [they] can stay tight from a vacancy perspective. That allows landlords a better chance of raising their rates, which is how they make their returns.”

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