Colliers International is a global affiliation of independently owned commercial real estate firms. The organisation's 9,327 employees span the world in 241 offices in 54 countries. On a worldwide basis, Colliers manages 595,725,580 square feet, and has revenue of $US 1,442,478,223.
�This report is from the Colliers International Canadian Office and reviews the Canadian Real Estate Market between 2005 and 2006.
In 2005, Canada's economy really picked up speed raising serious concerns about inflation. Torrid demand for Canadian products was pushing the manufacturing sector above capacity. The Bank of Investors continued to favor real estate as a stable, tangible asset when compared with the created value of the equity markets. Record sales volume was recorded as demand was limited only by supply.
The general outlook for the Canadian real estate market is good, with most viewing the market with confidence and expectations of growth. For those looking to invest, the time is now as prices will not be dropping anytime in the near future.
In addition, Canadian investors will find themselves competing with off-shore buyers for available properties. The days of "killer deals" may be gone but there are still significant opportunities for the wise investor.
Income-generating property sales activity was limited only by supply in 2005. High levels of liquidity continued in all major centres in 2005. Sales volume reached the record level of $21.2 billion. Conditions that have boosted activity to unprecedented levels over the last several years continued. These include: a strong national economic outlook, low interest rates, an abundance of debt capital, a mixed equity market performance and strong leasing outlooks for all asset classes and markets.
New supply of 355,000 square feet came to market in 2005 with the majority of the speculative construction being occupied. Demand continues to push developers, bringing another 150,000 square feet of new construction in 2006. Also on the rise is owner-occupied, design-build construction, as a half dozen businesses move from rental units to their own buildings.
New construction in the suburban markets will see approximately 160,000 square feet of class A office space added to our inventory in 2006. Five large tenants are relocating; three are making lateral moves and two are leaving downtown for suburban markets
All eyes are focused on Dartmouth Crossing for 2006. Phase 1 is anticipated to open in the final quarter of the year with 1.2 million square feet of retail, including a multi-screen cinema. Early in the New Year, Michael's Crafts is opening in the Bayers Lake Power Centre along with Warehouse One. Starbucks has not yet opened on Spring Garden Road, but the building is nearing completion, slated to open during the second quarter.
Dartmouth Crossing, the new multi-phase, 500-acre development off Highway 118, is well underway with over 800,000 square feet already committed. Phase 1 is comprised primarily of retail. Office and residential components are to come in later phases. This new power center is eagerly anticipated by consumers and should open in Fall 2006.
Also under construction is the Baker Drive/Highway 111 interchange in Dartmouth, which will open up 200 acres of primarily residential development. A 30-acre parcel has been set aside for commercial/retail development.
Robust leasing activity drove the retail vacancy rate down to 3.4%; all categories had a vacancy rate below 6%. Big box, regional and neighbourhood centres enjoyed the lowest vacancy rates at 1.6%, 2.7% and 2.6% respectively. Rentals rates rose as vacancy declined and new construction came online. Landlords are in control of the market and offer little in the way of incentives given increased demand.
Better than forecast sales of $306 million were recorded in 2005. Once again, multi-unit residential properties outperformed all other asset classes. 36% of total trades were for apartment units. Killam Properties Inc. continued to make accretive purchases, adding 1,364 units to its portfolio. Transglobe Property Management Services, a new player in Metro's apartment market, came in a close second purchasing a number of units in the north end of Dartmouth and a major portfolio in Halifax. The average cost per unit for apartments traded in 2005 was $65,800.
Highlights