If it weren’t for commercial mortgages, the Canadian real estate market could be in a very tight spot. At the same time the Canadian Real Estate Association announced that residential sales were down by a whopping 15 per cent in September (and were down about that much in October, too,) the Re/Max Commercial Investor Report is released. And it raises hope! Not just for commercial real estate buyers and investors, but for the Canadian real estate market as a whole.

The report shows that commercial properties in nearly all Canadian markets saw positive increases in both sales and dollar volumes for the first six months of the year. And while all cities saw an increase, the areas that were the most profitable in commercial mortgages were Greater Vancouver, Calgary, Edmonton, Regina, Winnipeg, London, Greater Toronto, Ottawa, and Halifax-Dartmouth. The report also stated that, “multiple offers were noted in six of the nine markets examined, including all major markets in the east, Winnipeg and Edmonton.”

While businesses needing a place to call home were responsible for some of the increases in commercial mortgages, and commercial property sales, Re/Max says it was mostly investors that led the boom this year. Re/Max said that both domestic and foreign investors were taking advantage of “continuing low interest rates and a generally bullish tone for the Canadian economy.” Re/Max also says that private investors have made up a large percentage of the group interested in commercial properties; and that their numbers have been increasing steadily. According to the real estate group, these private investors are most interested in entry-level properties that include multi-unit residential properties, retail storefronts in both urban and suburban areas, as well as small office buildings.

“Canada’s commercial market has quickly shaken off the signs of recessionary sluggishness and roared back to life, with 2012 building on impressive gains reported in 2011,” says Gurinder Sandhu, executive vice-president and regional director of Re/Max Ontario-Atlantic Canada.

Mr. Sandhu also says that with so many other investing vehicles showing signs of weakness and instability, now is the time for investors to jump into commercial real estate. Mr. Sandhu points to GICs and their measly returns, as well as the volatile environment of the stock market right now, as all reasons why commercial properties are the smartest place for investors to place their funds right now.

Right now, and in the future, too. Mr. Sandhu believes that this boom in commercial real estate will continue through 2013; and he’s not alone.

“Given the appetite for tangible investments with long-term revenue streams and potential for appreciation, commercial real estate has been gaining favour and is expected to be a top performer well into the New Year,” says Elton  Ash, regional executive vice-president for Western Canada.

So why the boom?

Re/Max points to the number of American stores that are making their way over the Canadian border, saying, “American brands such as Nordstrom, Target, J. Crew, Marshalls and numerous others have created a flurry of activity that is changing the Canadian real estate landscape.”

Re/Max also says that the Alberta and Saskatchewan are enjoying a boom in their economies as a whole right now, and this is also helping to support the commercial mortgage market in Canada. The $25-billion military shipbuilding contract that was just awarded to the Halifax Shipyard is also the main reason for the boost currently being seen in Nova Scotia.


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