Unlike the current residential real estate market, Canadian commercial real estate is booming. According to a new report released by CBRE Canada, commercial real estate transactions reached $16.5 billion CDN in the second quarter of 2018 — a 38% increase from the record total of $11.97 billion in 2017.
CBRE also stated that transactions are 105% above the five-year quarterly average. The current boom in commercial real estate transactions is due to a couple of major mergers and acquisitions that closed in the second quarter of 2018: Choice Properties’ acquisition of CREIT and Blackstone’s acquisition of PIRET. Both acquisitions made up 45% of the quarter’s total investment amount.
Other large deals that made a large impact on the total investment amount include Hines and Oaktree Capital Management’s $107-million purchase of Calgary’s First Tower and Tigra Vista Inc.’s $256 million acquisition of Toronto’s Parkway Place.
The report goes on to say: “With two large M[erger] and A[cquisition] transactions closing within the second quarter, it’s not surprising that investment volume was the strongest ever in Canadian history. In fact, the average deal size in Q2 was up 67% year-over-year to $9.4 million, which is reflective of the size and significance of the investors in real estate today.”
The report also mentioned that Toronto and Vancouver continue to be the primary destinations for commercial real estate investments, with Toronto alone contributing to over a third of all transactions in the second quarter of 2018 at $5.7 billion. Vancouver came in second place at $3.2 billion. Finally Calgary, Montreal and Edmonton form part of the top five cities at $2.5 billion, $1.7 billion and $1.5 billion respectively.