$11.2 Billion of Deals Makes Q3 2016 a Record Quarter for Canadian Commercial Real Estate Investment

CBRE Forecasts 2016 Will Exceed Previous 2007 Record

Toronto – December 7, 2016 – Investment into Canadian commercial real estate (‘CRE’) has reached new heights with $11.2 Billion of transactions recorded in Q3 2016. Canada has now posted two consecutive record-breaking quarters, with Q3 2016 surpassing the previous quarter total of $9.9 Billion by 13%. In 2016 so far, high levels of both domestic and foreign demand for Canadian CRE assets has pushed investment activity to $27.4 billion. This year-to-date total is already the third highest amount ever recorded even on a full-year basis, trailing only 2012 ($30.6 Billion) and 2007 ($32.1 Billion). With a further quarter of activity still remaining, CBRE’s forecasts that full-year 2016 investment activity will exceed $35 Billion to set a new Canadian record.

“Appetite for Canadian commercial real estate continues to grow stronger on an almost daily basis. We are in a global low growth environment that is expected to endure for several years and Canadian commercial real estate assets offer investors solid returns in a yield-starved world. Government bond yields are at all-time lows and the stock market is trading on historically high price-earnings ratios which is driving interest into hard assets such as real estate,” commented Peter Senst, President of CBRE Canada Capital Markets.

Foreign capital played a substantial role in Q3 and 2016 to-date. Of all deals over $10 million in Q3 2016, foreign purchasers totaled $3.0 billion, representing 41% of the overall investment volume and up from 22% in the first half of 2016. The vast bulk of foreign capital was directed at Canadian hotels, which accounted for $2.7 billion of the $3.1 billion total for the sector.

“Foreign demand for Canadian real estate assets continues to strengthen. In a world where political uncertainty is growing, Canada, with its stable real estate market in a country that protects property rights, is about as a safe a bet as there is. When you take these factors into account, the record pricing we’re currently seeing becomes highly understandable,” added Senst.

Apart from Multifamily, which remained consistent, every asset class posted large gains from the corresponding quarter in 2015. Hotels and office, the largest sectors in the quarter, totaled $3.1 Billion and $2.3 Billion respectively and each was propelled by blockbuster deals. These included Bluesky Hotels and Resorts’ acquisition of InnVest REIT and its 109 hotel property portfolio for $2.1 billion as well as CPPIB’s acquisition of a 50% interest in seven downtown office towers in Toronto and Calgary from Oxford Properties for $1.2 Billion.

Calgary and Edmonton experienced the strongest quarterly gains in investment activity of any Canadian cities at 146% and 55% increase respectively. Calgary posted its best quarter in over two years with total investment of $1.2 billion, more than double the average of the previous 10 quarters.

“With Oil prices beginning to slowly drift upwards and improved market sentiment, we’re seeing increasing activity in Calgary, particularly for prime, well-leased assets. Although a few large transactions helped make Q3 a very strong quarter for Calgary, what’s more encouraging is the 21% increase in the number of deals made compared to the previous quarter. Large vacancies within the office sector will continue to present significant issues for some time, but the increasing levels of demand for tier-one assets is a positive sign,” commented Senst.

Toronto and Vancouver continued their strong runs and remain the preferred destinations for foreign capital, with Montreal beginning to gain in foreign interest. With $3.5 Billion of transactions in Toronto, and $1.6 Billion in Vancouver, each recorded deal volumes above the 10-quarter average. Office continues to be the largest driver of GTA deals, accounting for over a third of the total in the quarter, while Vancouver continues to see substantial interest in land deals. With $1.3 billion in transactions occurring in 2016 to-date, Vancouver has now recorded more investment in land since January 2015 than the previous five years combined.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue).  The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide.  CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.  Please visit our website at www.cbre.com.

In Canada, CBRE Limited employs approximately 1,885 people in 20 locations from coast to coast. Please visit our website at www.cbre.ca.