There’s good news for business owners and investors looking at commercial real estate. While the residential market may be experiencing a cooling or softening of sorts, the commercial market has never looked better, right across the entire nation! Or so says CIBC anyway.

“All the fundamentals seem to be supporting the continuation of an extended recovery,” says Allan Kimberley, Vice-Chairman or Real Estate Investment Banking at CIBC, when speaking about the slight dip this market saw in 2008.

CIBC recently held their 18th annual real estate conference in Toronto, where the bank said that low interest rates, continued lending, and the availability of equity, are all setting up good supply-demand fundamentals, and all bode well for the capital markets this coming year, and possibly even next. This, says the bank, is on par with what was seen within these markets last year.

2012, says Mr. Kimberley, “saw record levels of new issuance, total returns exceeding those of the broader S&P/TSX Composite index, a growing list of IP and M&A activity, against a backdrop of declining volatility.”

Alex Avery, an Equity Analyst at CIBC, says that this recovery is good not only for those looking for commercial properties, but investors too.

“While current real estate market conditions remain highly attractive in many respects, property pricing has risen largely to reflect the favourable current environment. We expect attractive returns from this Canadian market in 2013, but more modest than seen in recent years.

That’s certainly a difference from what’s happening in the residential market right now.

Avery Shenfeld, Chief Economist at CIBC, says that many different types of properties are all destined to see an uptick this year.

“National vacancy rates for both office and industrial space which are likely to remain well-contained, while retail properties will continue to benefit from new entrants from the U.S.,” he says.

He also points towards the rock bottom interest rates the country is currently enjoying, and says that these will also continue to fuel the capital market this year.

“Wide spreads and forecasts for higher, but still low benchmark interest rates suggest favourable borrowing conditions should continue. Committed and proposed development activity currently remains measured in the context of the overall inventory of investment property in Canada, notwithstanding development proposals having picked up sharply in recent months.”


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