Canada’s commercial real estate sector has enjoyed a strong growth momentum, which analysts expect to continue into 2018.
In Vancouver, commercial properties for sale or rent will continue to be in demand. The city leads the market regarding office vacancy rates in the country. But institutional buyers are also acquiring space at new office projects at record-high prices.
Vancouver registered the second lowest vacancy rate in North America, after its downtown office properties posted a 5 percent rate in 2017, compared to 10 percent in the last 18 months. It marked the lowest figure since 2013 and may continue for the next four years.
Strong demand for offices primarily improved the occupancy rate in the city, even if it takes at least two years before the opening of new towers. As a result, investors and tenants should expect higher sale and rental prices in 2018.
Ontario Pension Board and Workplace Safety and Insurance Board’s $1.25 billion purchase of Cadillac Fairview’s portfolio serves as one factor for driving up prices. The $2,000 per-square-foot sale price for 170,000 square feet of space at the Bosa Development Tower in Vancouver also indicated that prices might increase next year.
The recent lease deal of Amazon may lead prime rental prices to exceed $50 per square foot for the first time. The U.S. tech giant recently signed a pre-leasing agreement for 150,000 square feet of space at the 33-floor Vancouver Centre 2 office building. It plans to occupy the tower by 2020.
Investors need to find a good broker before they decide to dabble in Vancouver’s commercial real estate market in 2018 since it could be hard to find reasonably priced properties. For those who intend to buy or lease office spaces next year, they might find the prices a bit higher as the city continues to attract more tenants.