Return to the Workplace: Adjustments and Expectations

Cushman & Wakefield’s Valuation & Advisory Hospitality & Gaming Practice Group provides consulting and valuation services for new and existing hotel properties across the globe. We are pleased to share our latest Canadian Lodging Industry Overview for 2019 and beyond.

With the Bank of Canada’s overnight lending rate up 75 basis points since last summer, rising to 1.25%, and further bumps expected through 2018, subtle changes are occurring in specific markets and asset classes. These glimpses offer the first evidence that cap rate compression may be reaching a tipping point as we head into the ninth year of a record-long growth cycle.

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.