{"id":21023,"date":"2022-12-28T10:10:00","date_gmt":"2022-12-28T18:10:00","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=21023"},"modified":"2022-12-29T08:50:34","modified_gmt":"2022-12-29T16:50:34","slug":"slowing-interest-rate-hikes-bode-well-for-commercial-real-estate-deal-making-financing-activity","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2022\/12\/slowing-interest-rate-hikes-bode-well-for-commercial-real-estate-deal-making-financing-activity\/","title":{"rendered":"Slowing Interest Rate Hikes Bode Well for Commercial Real Estate Deal-Making, Financing Activity"},"content":{"rendered":"<p style=\"text-align: justify;\">This year\u2019s rapid rise in the Bank of Canada\u2019s policy rate slammed the brakes on investment activity in the second half of the year, but better times await in 2023.<\/p>\n<p style=\"text-align: justify;\">Quarterly deal volume reached an all-time high of $21 billion in the first quarter of this year, according to a report JLL released Nov. 28. But it has fallen steadily since, dropping to just $11.2 billion in the third quarter. Deal activity is on track to fall by half in the final quarter of the year.<\/p>\n<p style=\"text-align: justify;\">CBRE Ltd, is calling for $56.1 billion in transactions this year, down about 5% from last year\u2019s peak of $59.1 billion. Vancouver \u2013 the epicentre of investment activity in BC \u2013 will see about $13 billion worth of transactions.<\/p>\n<p style=\"text-align: justify;\">During a lending and investment market update on November 28, Peter Senst, president of the firm\u2019s national investment team, was optimistic on the outlook.<\/p>\n<p style=\"text-align: justify;\">\u201cWe\u2019re still trading with reasonable velocity. The size and significance of the deals that we\u2019re doing in Canada, particularly in the second half of the year, will be the biggest in the world,\u201d Senst said during the online presentation.<\/p>\n<p style=\"text-align: justify;\">With inflation easing, he believes rate hikes are nearing an end.<\/p>\n<p style=\"text-align: justify;\">\u201cWe\u2019re thrilled with where inflation has seemingly hit a peak and is starting to come down,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">\u201cI believe we\u2019re through the rate hikes, substantially,\u201d he said. \u201cCost of financing we think will ultimately moderate through 2023 going into 2024, which is great.\u201d<\/p>\n<p style=\"text-align: justify;\">This will give investors the confidence to begin investing here once again, with industrial on track to benefit the most.<\/p>\n<p style=\"text-align: justify;\">Deal activity will be led by industrial, which has knocked commercial assets \u2013 office and retail \u2013 out of the top spot as institutional investors and lenders rejig their exposure.<\/p>\n<p style=\"text-align: justify;\">\u201cThis reflects the reweighting that\u2019s going on in balance sheets and portfolios,\u201d Senst said.<\/p>\n<p style=\"text-align: justify;\">Vancouver is particularly well placed, with development constraints and low vacancies pushing rents to $20.67 a square foot. Growth is set to continue as companies seek space in an extremely competitive and constrained market.<\/p>\n<p style=\"text-align: justify;\">\u201cIt\u2019s not going to be an overbuilt market,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">The optimism reinforces the findings of the recent Emerging Trends in Real Estate report, produced annually by the Urban Land Institute in partnership with accounting firm PricewaterhouseCoopers LLC.<\/p>\n<p style=\"text-align: justify;\">\u201cWhile some interviewees said that they were watching for signs of a slowdown in Vancouver\u2019s industrial market and the impacts of rising interest rates, others emphasized that land scarcity makes this asset class a best bet,\u201d the report stated.<\/p>\n<p style=\"text-align: justify;\">It gives top marks to Vancouver, which leads the country in almost every measure except with respect to capital availability and the number of opportunities for development.<\/p>\n<p style=\"text-align: justify;\">\u201cVancouver continues to be the top market to watch for both its investment and development prospects,\u201d the report stated.<\/p>\n<p style=\"text-align: justify;\">On the office side, the significance of the tech sector \u2013 a proxy for the city\u2019s attractive lifestyle \u2013 was a key factor in its favour.<\/p>\n<p style=\"text-align: justify;\">\u201cAmong the factors buoying the office market are a vibrant technology sector as well as a higher propensity for employees to return to the workplace in Vancouver and other cities in Western Canada,\u201d the report stated.<\/p>\n<p style=\"text-align: justify;\">While the current office development cycle is over as lenders hit pause on financing new projects, CBRE noted that Vancouver is well-positioned to navigate the challenges thanks to a market whose inventory of space is balanced between downtown and suburban locations.<\/p>\n<p style=\"text-align: justify;\">This makes it easier for workers to meet in person, and also helps shorten commute times, which CBRE described as \u201cthe last compelling reason why people are not returning to the office.\u201d<\/p>\n<p><a href=\"https:\/\/biv.com\/article\/2022\/12\/metro-vancouver-investment-deals-could-top-13-billion-year\" target=\"_blank\" rel=\"noopener\">Metro Vancouver Investment Deals Could Top $13 Billion This Year<\/a> by Peter Mitham | Western Investor | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This year\u2019s rapid rise in the Bank of Canada\u2019s policy rate slammed the brakes on investment activity in the second half of the year, but better times await in 2023. &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2022\/12\/slowing-interest-rate-hikes-bode-well-for-commercial-real-estate-deal-making-financing-activity\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-21023","post","type-post","status-publish","format-standard","hentry","category-market-updates"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Slowing Interest Rate Hikes Bode Well for Commercial Real Estate Deal-Making, Financing Activity &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2022\/12\/slowing-interest-rate-hikes-bode-well-for-commercial-real-estate-deal-making-financing-activity\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Slowing Interest Rate Hikes Bode Well for Commercial Real Estate Deal-Making, Financing Activity &#8226; 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