Canadian commerical real estate mostly healthy

By Tracey Arial

Other than potential saturations in the office markets in Toronto, Edmonton and perhaps Montreal, the fundamentals for commercial real estate in Canada are strong.

So says Michael Dal Bello, an investment partner at Pritzker Group Private Capital.

The fundamentals are very good in Edmonton, in terms of industrial, retail, and multi-family demand. They’re all pretty strong and frankly supply is in pretty good balance for demand. The office market though is a little tougher. We’ve got a number of projects that are coming on and our office market isn’t that deep in terms of demand and so we’ll probably have a bit of oversupply and run up in vacancy. That’s the big risk in our market in Edmonton.

For Canada, most markets are in fundamentally good shape, barring office markets in Toronto, with a lot of new supply coming on downtown, and to some extent maybe Montreal.”

Dal Bello says that there’s still a large pent-up demand for quality product amongst institutions and pension plans, but he doesn’t believe prices will increase in the short term.

We’re probably getting into the zone where people are not willing to pay much more, given the prospects of interest rates rising.”

As a result, his company plans to focus on developing industrial, multi-family and retail assets rather than buying them, as they’ve done since 2005.

“Unless we can find a very good property with intrinsic value that’s available at a discount, we’d rather invest in the development of new assets to add to the portfolio.”

Note: This report appears on page 58 of the Spring 2014 issue of Canadian Real Estate Magazine.

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