B.C. commercial real estate activity is expected to slow in the second half of 2011, according to the British Columbia Real Estate Association (BCREA).
On Tuesday, BCREA said its commercial leading indicator edged down 0.4 to 108.1 in 2011’s second quarter, furthering a slight downward trend that began earlier this year.
BCREA said the lower indicator is largely the result of weak retail sales and employment growth across the province.
“Tepid job creation and deteriorating global economic growth represent significant headwinds for the B.C. economy and could lead to softer commercial activity in coming quarters,” commented Brendon Ogmundson, an economist with BCREA.
He added, however, that the “unprecedented” decline in long-term interest rates might stimulate some investment activity.
On Monday, commercial real estate company Avison Young published its mid-year B.C. real estate investment review, noting lower dollar volumes invested in all asset classes so far this year.
According to the report, some $594 million was invested in office, industrial and retail assets in B.C. during the first half of the year, compared to a record-setting $1 billion in investment sales activity for the same period last year.
Avison Young pointed to a lack of supply as one of the main reasons why deal and dollar volumes declined in the first half, though it noted that the market has maintained its traditional strength.
“It is a perfect storm for vendors in the marketplace right now,” said Michael Keenan, senior vice-president and managing director at Avison Young’s Vancouver office.
“With a stable economy and banking system inspiring investor confidence, historic low interest rates, a lack of available quality commercial real estate and an inordinately high demand for commercial product that doesn’t exist, the combination of those factors has created an aggressive pricing environment and downward pressure on yields.
“Vendors … will find buyers of all types working to meet their pricing expectations.”
Joel McKay
Twitter:jmckaybiv