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Weekly Morguard Research Newsletter
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Research Reports

2017 Q3 Update - Canadian Economic Outlook and Market Fundamentals Report 

Canadian commercial real estate activity continued at a robust pace in the third quarter of 2017 with signs now pointing to a record year for investment, according to Morguard’s third quarter Economic Outlook and Market Fundamentals Research report. Canada’s office sector led the way with a second consecutive quarter of over $1 Billion in sales. Multi-suite residential and industrial sales also remained brisk. While downtown Toronto and Vancouver properties continue to garner the most intense bidding, investors are finding value in markets outside the downtown cores. In the retail market, recent announcements will put a damper on near-term fundamentals but Morguard believes the retail industry, particularly shopping centres that are dominant in their community, will continue to offer long-term opportunity for Canadian investors.

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2017 Q2 Update - Canadian Economic Outlook and Market Fundamentals Report 

Morguard’s second quarter Economic Outlook and Market Fundamentals Research report finds that demand for Canadian commercial investment property continues to stay strong and healthy even as the strengthening global economy drives a rise in interest rates and less accommodative monetary policy. After a second consecutive quarter of stronger than expected economic output, projected growth for 2017 has now surpassed 2016 levels with signs pointing to an early winding down of global monetary stimulus. Despite a perceived eagerness to raise interest rates, particularly in the United States, low inflation pressure should continue to act as a buffer against rapid monetary policy change in the near term. Nationwide office and industrial leasing continued to demonstrate robust occupancy rates despite weakness in Alberta. In the Canadian housing market, recent policy changes began to produce the desired cooling effect but there are indications that the respite might not last long.

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2017 Q1 Update - Canadian Economic Outlook and Market Fundamentals Report 

Above average transaction volumes, persistent demand and foreign capital are all driving Canada’s commercial investment property market.  The abundance of capital available for investment, in combination with the overall attractiveness of the market, is resulting in multiple-bid scenarios and higher prices. Consequently, there is downward pressure on yields, particularly regarding Canada’s premium assets. Modest price increases are expected to persevere for the near-term. While the Canadian market may appear small on the international stage, it is garnering significant attention from international investors. Investment volume hit a record high in 2016 and foreign capital continues to support above-average transaction volumes and prices. There are risks to the market which include the new U.S. administration’s protectionist threat, possible interest rate hikes, a potential prolonged commodities slump and the knock-on effects of a breakup of the European Union. Despite these, in Canada, demand for commercial real estate continues to outstrip the supply.

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2017 Canadian Economic Outlook and Market Fundamentals Report
Morguard is projecting another year of stable real estate investment performance in 2017 as investors look to the Canadian market for relatively stable yields. While there is a dichotomy between the financial and technology driven economies and resource-based economies in Canada, there remains attractive opportunities for investment. By the end of 2016, a record amount of capital, both debt and equity, was projected to flow into Canadian commercial real estate. Canadian investment transaction volume surged this past year reaching $27.4 billion in total over the first three quarters of 2016, compared with $16.9 billion over the same period in the previous year. Annual 2016 sales are projected to surpass the most recent annual peak of $32.1 billion in 2007. This immense growth in purchasing power, against a backdrop of moderately healthy Canadian economic fundamentals, was somewhat unique.

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