Canadian commercial real estate has been a great place to make money over the past five years — but industry players are increasingly nervous and worried about the future, according to a report released today by the Real Property Association (REALpac) and FPL Advisory Group.
REALpac’s second-quarter index surveyed commercial real-estate executives, and found that pessimism was as high as it had been since 2009, in the midst of the global financial crisis.
“Canada’s real estate industry has been on a tremendous run since 2009 and the question we keep hearing is, 'How long will it last?’” said Carolyn Lane, vice-president of marketing at REALpac.
“Our members are keeping a close watch on interest rates, economic growth here and in the U.S., and also debating whether asset prices can keep rising.”
Respondents’ top concerns were:
an eventual rise in interest rates in both the U.S. and Canada, and how that would affect a market used to low interest rate;
the prospect of a possibly weaker economic climate on the horizon for Canada; and
the possibility that current commercial real estate prices have peaked.
On the upside, respondents noted that debt capital is widely available, with lenders eager to get money out.
