Did market sentiment improve in Q3?
A new survey by Altus Group has shone a light on commercial real estate activity and sentiment across Canada in 2024’s third quarter, focusing on factors including community concerns, property performance, transaction intentions, and expectations for market conditions.
The survey revealed increased community-related concerns, with zoning reform, provincial/local regulations, and employment growth emerging as top priorities. Zoning reform saw a 10-percentage-point increase from the last quarter, while concerns about weather risk and insurance cost decreased by seven and six percentage points, respectively.
Industrial and multifamily properties remain popular despite their perceived performance slip, while industrial properties dropped from 73% to 58%. Multifamily properties also saw a 10-percentage-point decline. In contrast, expectations for student housing surged by 10 points, with fewer respondents viewing it as a "worst performer."
The survey highlighted increased transaction activity, with 75% of respondents saying they plan to buy or sell in the next six months, a 10-percentage-point increase from Q2. Net buying intentions rose to 26%, driven by smaller firms, while larger firms planned both buying and selling.
Most survey respondents said land development and single-family residential properties are overpriced, while retail was deemed a fairly priced property type. Expectations for key metrics, such as cap rates and property cash flow, remained stable, but confidence in the market's future has declined. Though transaction activity is expected to increase, concerns about capital availability and credit distress pose ongoing challenges for Canadian commercial real estate.
