B.C. breaks commercial real estate records
According to a new report released by Avison Young, after a strong first half of 2010, the momentum continued when B.C’s commercial real estate investment market reached $1.946 billion for the year – a provincial record.
The report says, "For the first time in the province's history, commercial real estate investment volume approached $2 billion in a 12-month period as 99 sales transactions completed. In the second half of 2010, the total volume of office, retail and industrial property sales was $920 million, almost matching the record dollar volume of $1.026 billion set in the first half. Total 2010 dollar volume easily surpassed 2009 and 2008 dollar volumes of $1.36 billion and $1.27 billion, respectively. The previous record was $1.53 billion in 2004.”
"All-time high dollar volume and transaction levels were indicative of the low cost of debt and redeployment of capital accumulated in the wake of the financial downturn of 2008," comments Avison Young Principal Bob Levine.
"Improved debt markets with fewer restrictions and reallocation of capital to targeted asset type investments propelled 2010 to new heights of commercial real estate activity in BC," he says. "Private purchasers were dominant in all asset classes more so than cash buyers such as pension funds, life insurance companies and REITs."
Looking at highlights from different sectors, in the Office sector, 26% (26 of 99) of total transactions were Office acquisitions.
In the Retail Space, the value of retail investment more than doubled 2009 numbers. Says Michael Gill, Avison Young Principal:
"Disposition of retail assets has been beneficial to both buyers and sellers in 2010. Buyers acquired quality assets that deliver stable cash returns, while sellers were able to maximize their return on investment in one of the strongest pricing environments in recent memory."
In the Industrial property sector, there were signs that the recession was over in 2010: “Industrial transactions increased to 33 from 21 while dollar volume rose 58% to $313.5 million from $199 million in 2009.”
Supply restrictions supported strength in buyer interest, as well as low-cost borrowing