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Canadian Commercial Real Estate Market Update: Q3, 2022

Updated: Nov 30, 2022

Recently, Altus Group, a Toronto-based software company for the commercial real estate (abbreviated as CRE) industry, released a report on the Canadian CRE market for the 3rd quarter of 2022. According to their survey, the Overall Capitalization Rates (OCR, a variable derived from dividing a property's net operating income by the property's value) rose to 5.17% in Q3 2022. This is an increase from the previous quarter (5.04% for Q2 of 2022), as well as from a year ago (5.01% for Q3 of 2021).

Here is a brief summary of the report:

The top three preferred markets by investors across all asset classes were Vancouver, Toronto, and Ottawa. Due to the nationwide anticipation of rising interest rates, a downturn in the momentum ratio was reported in the location barometer across most markets in Q2.

The top three most preferred property types by investors were food-anchored retail strips, industrial land, and multi-tenant industrial assets. The food-anchored retail strip and industrial land assets showed the largest increase in momentum ratio.

The top 15 products/markets, with the most positive momentum, were:

  • Vancouver – Food-anchored retail strip, Industrial land

  • Edmonton – Food-anchored retail strip

  • Calgary – Multi-tenant Industrial

  • Toronto – Food-anchored retail strip, Suburban multiple-unit residential

  • Ottawa – Food-anchored retail strip, Suburban multiple-unit residential, Industrial land

  • Montreal – Food-anchored retail strip, Single tenant industrial, Suburban multiple unit residential, Industrial land

  • Quebec City - Food-anchored retail strip

  • Halifax - Food-anchored retail strip

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