Peter Senst heads CBRE’s national investment team in Toronto, focusing on on office, retail, Industrial, multi-family, and land.

Senst also sits on the company’s global capital advisory team.

He will be among the guest speakers at the Connect’s inaugural Canada Kick-off in Toronto on June 11. In this interview, Senst provides his insights on the state of the Canadian commercial real estate investment market and the potential impact of the Bank of Canada’s interest-rate cut to 4.75% from 5%.

How would you assess investor appetite given the current investment climate?

Really, what we what we’re seeing right now alive on all our files, if assets are priced correctly, investors are there. That question really, to me is about the bid-ask spread around assets when book and market values aren’t in sync. So, if somebody needs a price that doesn’t reflect market today, the investor appetite is very limited. The inverse is very true as well. If there is current pricing that reflects market, it’s all types of capital. Last year, it was all foreign. This year, it’s private, it’s foreign, and we’re even seeing a little bit of the Canadian open-ended fund capital being available today. So, it’s better today than it was this time last year.

What’s your take on the bid-ask gap? A lot of people see it as widening and see it as a stumbling block.

I would say the calibre of the asset, the calibre of the market, and the characteristics of the cash flow will determine, ultimately, how something needs to be priced. And the stronger you are on those characteristics that I just mentioned, the better the bidding is. So, good assets, good markets, good, quality cash flow with term. There’s groups that still want real estate. [Demand] is certainly not what it once was, let’s say in that sort of 2015-2019, period, but it’s still pretty good. The Q1 numbers? We had $1 billion of trading activity. That’s an okay quarter.

In your view, what will the Bank of Canada’s interest-rate reduction mean to the market?

One quarter point won’t do much, but it sets a trend. It starts people thinking about what’s the art of the possible in the future. So we’ll see. I just don’t know if it’s a great thing to do, frankly. But I’ll take any positivity. I’ll take any silver lining right now.

What’s your outlook on investment in Canada versus global markets?

We’re a great beta bet. At this stage of the cycle, at the bottom of a cycle, Canada has less risk. We don’t overbuild. We don’t overborrow the same way. So, what happens is groups like our real estate, the consistency of the returns at a time like this. Some groups get it and some people say: ‘You know what? I just get so much more yield in some of these bigger markets.’ So, it really depends on what you’re solving for.

Canada, the safety is incredible here. We don’t have what’s going on in Ukraine makes a lot of the European markets skittish. Geopolitical tensions around China making your Asian trading, do trickier. Capital markets in the U.S. are still kind of broken. It’s getting better, but it really positions Canada as one of the better safe havens. It’s been that way for a while. We did a big deal last year with GIC. We did a big deal with [the Government Pension Investment Fund.] GPIF last year [and] TPG.

There was a lot that went on in this country. We did the biggest deals in the world. So, it’s something where groups recognize what we’re doing. But it doesn’t help when our government changes [i.e. increases] the capital gains tax. The government did less and didn’t do insert themselves in the wrong way at the wrong time, it would help us more.

But, still, Canada looks good versus the world when it comes to real estate right now.

Get Ready for Canada Kick-off

Connect CRE will hold its inaugural Canada Kick-off Event in Toronto on June 11. This will be Connect’s first commercial real estate industry conference in Canada. Panelists will include Syl Apps, managing director and co-country head for Hines; Lindsay Brand, chief investment officer at Concert Properties; Mark Kenney, CEO of Canadian Apartment Properties REIT; and, Marie-France Benoit, Avison Young’s director of Canadian market intelligence. Come and gain insights from industry leaders on such matters as buyer sentiment amid a lower interest-rate environment, cross-border commercial real estate transaction trends, and investors’ outlook for 2024 and beyond. Register today.