Canada CRE News In Your Inbox.

Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.

Sub Markets

Property Sectors

Topics

Canada  + Ontario + Pacific Canada  + Office  | 
An anticipated increase in Canadian distressed office sales will mainly involve older properties, says a Cushman & Wakefield workplace strategies specialist.

Older Office Assets More Likely to Become Distressed: Sannella

An anticipated increase in Canadian distressed office sales will mainly involve older properties, says a Cushman & Wakefield workplace strategy expert.

“I would say there is a likelihood of [more distressed office asset sales],” said Samantha Sannella in an interview with Connect. “They’re probably in class B and C buildings, where people don’t want to go to the office as much.

“They’re not in our class A buildings. Those are still very much in demand and they’re still getting the high rents.”

offices he Canadian office real estate sector will experience more distressed asset sales over the next few years, says CBRE’s chairman.

The office market poses the largest refinancing risk as work patterns change, said Paul Morassutti during a presentation at the recent Vancouver Real Estate Forum. Office values will be lower than they have been over the past five years, making it harder for investors to obtain debt capital.

Many lenders are already avoiding office assets altogether, he added.

“None of the other sectors have this particular mix of ingredients,” he said. “The result will undoubtedly lead to more distressed sales, albeit to a much lesser extent than what we’re seeing in the U.S., since our banking system, relatively, is much more stable.”

But all of the dislocation will present an opportunity.

“We believe that the next few years may very well present an extraordinary buying window for well capitalized office buyers who have vision and a well defined strategy,” said Morassutti.

Canada, he contended, needs more office conversions to other uses.

“Removing non-competitive office space and replacing it with much needed residential housing is a policy no-brainer,” he said.

Calgary, where the municipal government has provided financial incentives for downtown office conversions, is leading the way in that area. But in most cities, conversion economics are challenging and further incentives are required, he asserted.

“Without them, the bulk of this activity will likely take place on the margins,” said Morassutti.,

Connect

Inside The Story

Paul MorassuttiCBRE

About Monte Stewart

Monte Stewart serves as Content Director - Canada for Connect Commercial Real Estate. Based in Vancouver, British Columbia, Monte provides daily news coverage of major Canadian commercial real estate markets, including Vancouver, Toronto, Montreal and Calgary. He has written about the real estate sector for various media outlets and Avison Young since the early 2000s. In addition, he has covered sports, general news and business for several leading wire services and publications, including The Canadian Press, The Associated Press, The Calgary Herald, The Globe and Mail, Research Money, The Daily Oil Bulletin, Natural Gas World and The Toronto Star. Monte is active in his community as a youth basketball coach and raises funds for such charitable causes as Movember.

New call-to-action
New call-to-action