Canada's commercial mortgage market has changed drastically over the last two years, with appetite for certain sectors completely drying up and lending guidelines drastically tightening. All that seems to be on the way out, however, as recent signs point to a recovery.
Canada's commercial mortgage market has changed drastically over the last two years, with appetite for certain sectors completely drying up and lending guidelines drastically tightening. All that seems to be on the way out, however, as recent signs point to a recovery.
Even the Globe and Mail heralded on the front page of its business section "Commercial real estate bounces back," saying an 18-month slump in Toronto is over and that other urban centres shouldn't be far behind - all signs that Canada's commercial market has "de-coupled from its troubled U.S. counterpart."
In the U.S. talk is centred on the Commercial Mortgage Backed Securities program and how it threatens to eat up bank balance sheets and potentially reverse any economic progress the country has made.
Dale Bilton, a commercial broker with Mortgage Intelligence, said that Canada is "very blessed" in that it "didn't experience what they did in the U.S."
He recently partook in a commercial investment roundtable hosted by CMP's sister magazine, Canadian Real Estate, in which the theme was more about ample opportunities rather than dealing with losses. "There has been a slow down in the past year," said Bilton. "However, my lenders that I'm dealing with, which are institutional in most cases (i.e. charter and near-charter banks) are aggressive - they have funds to put out."
The Globe also points to stats from industry tracker RealNet Canada Inc., which show that "investments in commercial property in the Greater Toronto Area increased by 46 per cent in the third quarter over the second quarter, to $1.31-billion, while the number of transactions increased by 20 per cent," it said.
And while the numbers may not be near 2007's, which was closer to $3 billion, CB Richard Ellis vice-chairman John O'Bryan told the paper that it's still encouraging.
"Before things can get better, they have to stop getting worse and start to firm up - and this is what we are seeing," he said.
