Perspective: Q3 2017 Cap Rates Across Canadian Markets - Cushman & Wakefield

Perspective: Q3 2017 Cap Rates Across Canadian Markets

Stuart Barron

Stuart Barron

National Director Research/Real Estate Finance

Phone +1 416 359-2652

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It is important to remember that the Bank of Canada implemented its first interest rate rise in seven years as recently as mid-July 2017. So it’s no surprise that rising interest rates have done little more than scratch the surface of heated demand for Canadian commercial real estate.

That said, a key observation of the quarter is that the narrowing spread between cap rates and the 10-year government of Canada bond yield is putting a lens on markets and asset classes where returns are potentially higher. As a result, markets with greater yield potential could experience further modest cap rate compression, within this rising interest rate environment.