A lengthy period of runaway speculation in B.C.’s commercial property investment market has come to an end, with more modest economic fundamentals now driving purchases, according to Avison Young’s 2018 year-end figures.
While last year marked a notable decrease, 2018’s totals were still the second-highest on record and remained well above the annual totals for 2009-2016. Investors are also assessing deals based on population growth in the area, tenant demand, rental rates and other fundamental aspects of property ownership.
Financing costs have climbed over the last year as well. “They are levelling off now as we speak, but what I’m hearing is groups are definitely being scrutinized a lot harder when they’re going in for either land financing, construction financing or take-out financing on a development.” As for the main asset classes, retail logged the largest numbers, totalling 45 per cent of the year-end sales for $2.9 billion. Office logged 37 per cent of the sales for $2.4 billion and industrial marked 18 per cent of deals for $1.2 billion, according to the report.
“There is more of a selective process in buying land than there has been in the last three years,” he said.