These investors gravitate towards large office and retail portfolios
In British Columbia’s flourishing commercial property market, institutional investors reign supreme.
According to the Mid-Year 2019 Investment Review (British Columbia) report by Avison Young, fully 85 commercial deals closed during the first six months of the year, with a total value of more than $2.74 billion.
And while institutional investors were involved in just 8% of these completed deals, their disproportionate impact was undeniable as they accounted for 66% of dollar volume during that period, with more than $1.8 billion.
Much of this stemmed from the sheer size of the properties involved, the report stated.
“Of the seven institutional acquisitions in the first half of 2019, four involved significant downtown and suburban office assets and two were regional shopping centres in secondary markets,” Avison Young explained.
Office spaces were the best-performing asset class during that period, with its volume of more than $1.9 billion representing 70% of the first-half total. This was spread across 21 sales, including the major Bentall Centre transaction valued at $1.05 billion.
“Investor appetite for office properties in Metro Vancouver, particularly in the core, will remain robust through 2019 with quality assets attracting multiple bids and achieving premium pricing,” Avison Young noted.
In terms of number of transactions, private buyers are still the most prominent purchasing group in BC, accounting for 82.5% of the deals completed during the first half of 2019.
However, this segment’s share of overall value shrunk to a record-low 29%, significantly below the 60.6% ratio seen in 2018.
“Prior to 2017, the last time private buyers were responsible for less than 50% of overall dollar volume was in 2012 when they accounted for 72% of total purchases, but just 38% of the $2.35B invested that year.”
