Investment capital flows into Canada and U.S. markets, defying initial interest-rate hike

 Canada has exceeded pre-credit crisis investment dollar volumes and pricing for most asset categories, while improving property market fundamentals continue to fuel investment activity in the U.S. There is no evidence that the recent rise in interest rates slowed activity on either side of the border in the first half of 2013. However, it will be interesting to see what the effect will be of the biggest buyer group – interest ratesensitive real estate investment trusts (REITs) - taking a break from their insatiable buying spree. 

 
Canada Overview
 
Healthy market fundamentals continue to drive investment activity in  Canada. Slightly more than $14.4 billion (CAD) worth of commercial  real estate assets (office, industrial, retail, multi-residential and land,  greater than $1 million) traded in the first half of 2013 – up $1 billion or  8% compared with the first half of 2012. Led by industrial transactions, Toronto’s $6.5 billion was the highest  investment dollar volume in Canada – up 15% compared with the first  half of 2012 and capturing 45% of the national total. Toronto led in every  category except land. Active land sales helped Calgary ($2.2 billion / +4%  / 15% share) displace Vancouver ($2 billion / -20% / 14%) from one year  ago for second position. Land sales also boosted Edmonton ($1.6 billion  / +28% / 11%) past Montreal ($1.6 billion / +46% / 11%), which saw a  significant uptick in multi-residential sales. Despite a surge in industrial  trades, Ottawa ($618 million / -29% / 4%) remained below the $1 billion  mark.
 
U.S. Overview
In Avison Young’s U.S. markets, commercial sales rose during the first   half of 2013 compared with the first half of 2012 primarily on the   strength of multi-residential asset dispositions. Sales volumes for office,   industrial, retail and multi-residential properties reached $77.5 billion   (USD) by mid-year 2013, compared with $60.3 billion for the same period   in 2012, a 28% increase. Three stand-out markets comprised 47% of all   sales volume in the U.S.: New York ($14.6 billion / +59% / 19% share), Los   Angeles ($11.3 billion / +54% / 15% share), and Washington, DC ($10.8   billion / +107% / 14% share). Other markets that registered notable yearover-year changes in volume included Las Vegas (+73%), Orange County   (+66%), Atlanta (+63%) and San Mateo (+56%).

on October 15, 2013