by the continued decline in oil prices, while Toronto and Vancouver benefited The upward shift of hotel cap rates that began in H1 2015 continued in the first. In contrast, hotels registered higher cap rates, as investment activity declined most Toronto and Vancouver were the engines of the investment market in 2015 Vancouver: The continued compression of cap rates due to redevelopment potential on almost any property appears to have halted. Instead, a different set of fundamentals have once again moved to the forefront: high tenant demand, under market rents, and strong lease covenants. Per square foot, the list cost median is $209 in Vancouver. The Portland Metro Area has a higher per square foot average of $223. In Vancouver, $335,000 is the presently listed house cost median. $307,400 is the house cost median for houses that have sold. In the city of Vancouver Washington, $1,662 is the rent cost median. However, Vancouver cap rates were lower than the national average in all 19 surveyed property categories — for example, in the 4 to 4.5 per cent range for downtown class AA office space versus the national average of 5.08 per cent. “Both foreign and domestic investors are showing a continued willingness Q3 2018 Canadian Cap Rates & Investment Insights CBRE Research | PAGE 7 REGIONAL POWER STRIP NEIGHBOURHOOD STRIP (NON-ANCHORED) National Retail Summary Historical Retail Cap Rates Vancouver Toronto Victoria Calgary Edmonton Saskatoon Ottawa Montreal Winnipeg Kitchener-Waterloo London-Windsor Halifax Quebec City 0% 2% 4% 6% 8%
Vancouver: The first quarter of 2018 is a continuation of Vancouver’s long run of ever higher prices, and ever compressing cap rates. Factors such as trade and commerce disputes, both international and interprovincial, recent BC government tax changes and another round of rumoured interest rate hikes, may begin to dampen market appetite for Overview . CBRE Hotels' mission is to be the single strategic advisor to our clients for the provision of hotel, hospitality and leisure-focused real estate services, focused on the acquisition and disposition of hospitality properties in Canada. cap rates downwards in Toronto, Ottawa and the Waterloo region during the second quarter of 2017. Modest cap rate compression in downtown Toronto was driven in part by upward pressure on Class A rental rates within a very Note 1 STR June Monthly Hotel Review includes Montreal, Vancouver, Toronto, CBRE Hotels team of over 265 hotel specialists understands the unique challenges and opportunities that come with investing in and divesting hotel properties
are driving investor interest. Cap rates for urban streetfront properties in Toronto fell by 13 bps to end Q3 2017 at an average of 4.13% while cap rates for these properties in Vancouver remained the lowest in the country at 4.0%. HISTORICAL RETAIL CAP RATES Regional Power Strip Neighbourhood Strip (non-anchored) 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% Capitalization (cap) rates have been dropping in most North American markets but none more so than in Vancouver. A capitalization rate is the ratio between an asset’s net operating income and Publicly Traded REIT Cap Rates Trending Up Source: Investment Banking Bulletins, SEC, HVS 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% YE 2007 YE 2008 YE 2009 YE 2010 YE 2011 YE 2012 YE 2013 YE 2014 YE 2015 9.0% 12.5% 6.6% 5.1% 6.3% 6.5% 7.0% 7.2% 8.3% Implied REIT Cap Rates At the end of 2016, the weighted average hotel cap rate was 7.5%, based on chain hotels in our data sample. This figure has risen to 7.7% based on year-to-date data through May 31, 2017. This figure has risen to 7.7% based on year-to-date data through May 31, 2017.
A quarterly snapshot of Canadian commercial real estate cap rates and investment trends.
Vancouver: The first quarter of 2018 is a continuation of Vancouver’s long run of ever higher prices, and ever compressing cap rates. Factors such as trade and commerce disputes, both international and interprovincial, recent BC government tax changes and another round of rumoured interest rate hikes, may begin to dampen market appetite for Overview . CBRE Hotels' mission is to be the single strategic advisor to our clients for the provision of hotel, hospitality and leisure-focused real estate services, focused on the acquisition and disposition of hospitality properties in Canada.