Perspective: Q2 2018 Commercial Real Estate Cap Rates in Major Canadian Markets
Stability and further sporadic compression remain trends across Canadian markets, in spite of four incremental interest rate hikes over the past year by the Bank of Canada. Such resilience is underpinned by solid fundamentals that continue to fuel fierce demand for commercial real estate.
Canadian real estate markets continued attracting strong investor interest in the second quarter, particularly across secondary markets and yield-advantaged asset classes. Solid fundamentals acted as a buffer against headwinds generated by rising interest rates, such as increasing debt service costs which are beginning to slow retail spending by debt-ridden Canadians.