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