Last night I was reading a research paper put out by CBRE about the commercial & multi-family apartment market in Canada, and they’re pretty bullish on what’s going to happen this year. They also attributed a contraction of sales in 2009 to a lack of quality product.
From the Canadian Multi-Housing Marketview (PDF):
There was a significant amount of investment in the multihousing market considering the fact that overall investment in commercial real estate was down 38.9% nationally. Multi-housing investment volumes declined 22.2% to $2.4 billion from $3.1 billion in 2009. The decline was primarily caused by a lack of available product. Multi-housing fundamentals held-up well during the recession and so too did the value of most assets. Owners were hesitant to sell trophy buildings, but active Canadian investors were mostly interested in smaller less expensive assets.
Deal volume should increase in 2010 as owner and purchaser expectations come in line with each other and financing becomes increasingly available. Overall, fundamentals should remain stable in 2010, but some markets will benefit from the economic recovery sooner than others.
…
The multi-housing sector performed quite well in a very difficult environment. There were only 83 fewer transactions in 2009 than in 2008, but the trades that were completed this year usually involved smaller buildings than in years past. The lack of trophy assets, portfolio deals and larger buildings for purchase caused sales volume to decline 22.2% to $2.4 billion, the lowest volume since 2001. Since rental market fundamentals were largely maintained during the recession, owners were not pressed to sell buildings and remain hesitant to sell into a down market.
Canadian investors were most active in 2009 as the percentage of foreign investment fell from 10.7% in 2008 to 0.6% in 2009. As for investment in individual markets, Vancouver and Montreal accounted for 52.5% of the total sales volume. While Montreal was leading the nation in multi-housing sales volume at mid-year, Vancouver ended the year with $647 million in volume compared to $602 million in Montreal.
The report contains this interesting tidbit:
Waterloo and Ottawa bucked the downward trend in the average price per suite. The average unit price rose to $133,549 in Waterloo and $135,659 in Ottawa. Nationally, the average price per suite fell to $101,593 from $111,287 at year-end 2008
Now, this is interesting because Waterloo does not have a higher price per suite than cities like Toronto and Montreal. What I think may be skewing the averages were some of the sales of large student rental properties in last year (Notable Multi Family & Student Housing Transactions in Waterloo), that are value on a per bedroom basis (so a 5 bedroom unit, which is valued at $65,000 a bedroom, may be read as $325,000 per unit and skewing the numbers), but I’m not 100% sure about this.
CBRE also had this at the end, looking at some of the top multi-family apartment sales in 2009:
For more information about the commercial real estate market in Waterloo Region, contact me today at Benjamin@BenjaminBach.com or call me at 519.772.4376.
KW Commercial is your one stop shop for commercial, investment, retail and multi family advice and brokerage in Waterloo Region.
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