The Globe and Mail very recently reported that the optimism surrounding commercial real estate in Canada might soon be coming to an end. Confidence has begun to shrink as the reality of the state of the economy starts to set in. These findings were accumulated by the Real Property Association of Canada, using factors such as prices, capital availability and current real estate conditions.
Shopping mall and office owners stated that they expect fewer deals to go down over the next little while, the dramatic increases in rental income and cap rates being the primary cause.
Although residential and office markets remain relatively strong at the moment, the mindset among investors has been shown to be a rather dark one. Economists have also weighed in, and their forecasts are not much better. Economic growth in the commercial market will steadily ratchet down over the next 2 years. REIT share prices have also fallen due to rising mortgage costs. Observing the market over the next little while will help in getting a clearer picture of the market.
Source: The Globe and Mail
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