Canadian commercial real estate investment displayed positive momentum in the second quarter of 2024, says a Morguard report.

Investors continued to show confidence in the multi-residential rental and industrial sectors.

“Both the commercial real estate and multi-suite residential rental sector exhibited a measure of resilience in the second quarter, which built on a solid foundation for growth,” said Angela Sahi, orguard’s president and chief operating officer.

“With easing inflation pressures and encouraging signs of rate cuts, this positive momentum indicates that the Canadian real estate market is set to gradually rebound.”

Morguard expects investor confidence to increase as the Bank of Canada implements more interest-rate cuts, following three consecutive reductions this summer, and inflationary pressures continue to ease.

“Despite a weaker near-term economic growth outlook, real estate investors will continue to exhibit a measure of confidence in Canada’s commercial real estate sector, as evidenced by the uptick in transaction volume in the second quarter,” said Keith Reading, Morguard’s senior research director. “This confidence is expected to persist as the real estate sector gradually recovers from the effects of the most recent economic slowdown.”

The report covers multi-family rental, office, industrial and retail investment sales transactions valued at $10 million or more.

Total transaction volume edged higher quarter-over-quarter to a combined total of $3.7 billion across five major markets: Vancouver, Calgary, Toronto, Ottawa and Montreal. Private and foreign buyers remained the most active investors.

Industrial deals accounted for most of the increase, rising 48.1%, or approximately $600 million quarter-over-quarter, to $1.8 billion.

Private buyers were the most active industrial buyers, maintaining a trend that has prevailed over the past few years. Industrial investors reliant on low-cost debt capital remained largely inactive.

The multi-suite residential rental sector posted the second-highest increase, $858 million. The sector’s conditions were stable, but investment remained below the recent peak of early 2021 and early 2022, and the medium-term average.

Retail property investment remained largely unchanged as investment totalled $479 million, down $14 million from the previous quarter. A trend of weak retail capital flow persisted through the end of the second quarter, said Morguard.

The report was headed by Keith Reading, Morguard’s senior research director.

Photo: Morguard