PERSPECTIVE: Q4 2018 Commercial Real Estate Cap Rates in Major Canadian Markets

Stuart Barron • 3/13/2019
A shadow was cast over global economic growth at the close of 2018 due to mounting concerns about the potential for U.S.-led trade wars, a deteriorating euro zone outlook, and turmoil surrounding Brexit.

Meanwhile, at home, international oil prices, such as West Texas Intermediate, plunged by more than $25 U.S. a barrel in the fourth quarter, shaking up the fragile recovery underway in Alberta.

The silver lining in this somewhat gloomy picture was the more conservative stance taken by the Federal Reserve and the Bank of Canada to hold back on rate hikes until the conditions that impact tomorrow’s market are better understood. While opinions vary, interest rates are unlikely to rise more than 25-basis-points over the next 24 months – and could conceivably be lowered if growth slows further. So, for now, you can count a continued low interest rate environment, which could extend this long-run boom cycle through 2019 and possibly 2020.

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