Commercial real estate investors prefer to complete deals in Vancouver rather than other major Canadian markets, says a new report from Altus Group.

Vancouver was the most preferred market in the fourth quarter of 2023 amidst macroeconomic challenges, says Altus in a quarterly report on the city’s commercial real estate investment sector. Toronto and Ottawa rounded out the top three.

Although Vancouver was investors’ market of choice, investment declined noticeably in the region’s key asset classes as high interest rates and inflationary pressures weighed down transaction activity.

Investment in residential and ICI land decreased 62% year-over-year. Meanwhile, the multi-residential sector witnessed a 53% year-over-year decrease to $768 million.

Retail investment fell 49% on an annual basis to $968 million. The troubled office sector saw a 36% decline, to $579 million, as it continued to grapple with high vacancy due to the effects of the COVID-19 pandemic and the remote-work movement.

The industrial sector continued to show resilience as investment dollar volume experienced a “minimal” 4% decrease to $2.6 billion.

Investors had difficulty securing financing as the market’s overall investment dollar volume sank 48% to $8.4 billion.

The Altus report was authored by Jennifer Nhieu, a senior research analyst based in the firm’s Toronto office, and Heather Cho, a Vancouver-based team leader.