Canada’s commercial mortgage market – are there reasons for optimism?

Houses for sale in Ottawa

The latter asset types are attractive to investors, he added, because they’re stable – and there’s also some room for optimism on the retail front, whose outlook has improved in recent months after dipping at the height of the COVID-19 pandemic.

Among the indicators of a resilient retail space include the purchase of a 49% stake in Vaughan Mills shopping centre outside Toronto to LaSalle Investment Management in December, a deal that ranked as one of the largest retail transactions its long-term owner Ivanhoé Cambridge has conducted in recent years.

Office remains troublesome asset class in commercial realm

That “relatively healthy” long-term outlook for retail contrasts sharply with uncertainty in the office asset class, where plenty of tenants are unsure of their future and what their businesses might look like in the coming years.

“So it’s a wait-and-see prospect for office tenants,” Reading said. “That uncertainty is obviously playing into how well properties perform. In a nutshell, tenants are saying, ‘OK, we’re just in a holding pattern right now,’ and that’s really impacting the office market.”

Retail and office are both witnessing a “bifurcation” between top-quality assets and riskier investments, according to Reading, although that trend isn’t apparent in the industrial space.

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