More Canadian commercial real estate investors are preparing to bring their capital off the sidelines, according to a new Altus Group report released Wednesday.

Within the next six months, 75% of investors surveyed intend to buy or sell properties across the country. That rate is up 10% from the second quarter of 2024 and represents the highest level in the past year.

But investors do not view industrial and multi-family assets as highly as they did in the second quarter. The number of people who view industrial as the best performer dropped 15%. Meanwhile, investors who rate multi-family the highest declined 10%.

Most investors anticipate that the cost of capital and interest rates will decrease within the next 12 months after both metrics swung significantly over the past two quarters.

But most investors (67%) view operating conditions as “somewhat challenging.”

The Bank of Canada implemented its third consecutive interest-rate cut in early September. Last week, the U.S. Federal Reserve made its first of an expect series of reductions.

“The survey results revealed lingering concerns in the commercial real estate market in Q3, though there was increasing optimism about future improvements,” said Omar Eltorai, director of research for Toronto-based Altus, in a news release.

“While CRE transaction activity remained muted in the face of high borrowing costs and expectations of impending interest-rate cuts, last week’s rate cut in the U.S. should boost investor sentiment, potentially encouraging those on the sidelines to re-engage with the market.”

Most Canadian survey respondents view land, developments and single-family homes as overpriced, suggesting that the bid-ask gap needs to narrow more before transactions ramp up.

Meanwhile, 89% of U.S. investors surveyed expect to transact within the next six months, according to a separate Altus report also released Wednesday.

U.S. investors’ capital-availability expectations rose across all debt sources in the third quarter, according to Altus. Most notably, U.S. investors’ net expectations for capital from insurance companies rose 17 percentage points to 14% from the second quarter of 2024.

The majority of U.S. respondents also expect to see a decline in the cost of capital.

Altogether, the Altus surveys received feedback from 437 CRE professionals in Canada and the U.S. who represent about 163 firms.

Altus conducted the surveys between July 11 and August 6.

— with files from Paul Bubny, Connectcre.com

Read Paul Bubny’s full story about Altus findings on U.S. investor sentiment.