Photo: Brian Holsclaw/Flickr
In the first three quarters of 2017, Metro Vancouver’s commercial real estate sales recorded the strongest nine month period on record, and this pace is expected to continue into the New Year.
Last quarter, commercial sales totaled at $3.2 billion, representing the third consecutive quarter where overall investment volumes remained above $3 billion, according to Altus Group’s Q3 2017 Vancouver Investment Transactions report, published on Thursday.
"Overall, we do think that 2017 will be a record year in terms of dollar volume. Certainly, we're seeing strength on the land side and we don't expect that to slow,” Matthew Boukall, Senior Director, Residential Products at Altus Group tells BuzzBuzzNews.
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Boukall says consumer confidence is driving commercial activity in Metro Vancouver, with local, national and international buyers entering the market this year.
Residential and industrial commercial investment (ICI) transactions dominated the commercial market last quarter, accounting for 72 per cent of the overall capital flows.
According to Boukall, last year Metro Vancouver’s commercial market was driven by massive land transactions, but this year the market saw more average-sized deals between $25 million to $75 million.
He adds that the strength of Metro Vancouver’s commercial market is directly correlated to the region’s skyrocketing residential housing market.
"What we're seeing is high land prices driving up commercial land values. So, the ICI deals are seeing large volume because they're being impacted by the fact that condo developers are also paying high pricing for residential land,” says Boukall.
In Q3 2017, residential development accounted for over half of commercial sales activity, as developers bought land to bring more supply to the housing market, says Boukall.
He adds that many of these residential transactions occurred in Burnaby and Coquitlam.
After a strong first half of the year, office and retail investment slowed last quarter but year-to-date are ahead of 2016 by 78 per cent and 61 per cent, respectively.
As for next year, Boukall says dollar volume growth is expected to ease in 2018 compared to the last three years. However, he adds that 2018 could be another record year for Metro Vancouver’s commercial market, as the strong pace is expected to continue.