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The Canadian commercial real estate market was on fire in 2017 – but will 2018 bring more of the same?

Photo: James Bombales

Canada set a record for commercial real estate investments last year, making it one of the most successful commercial property markets in the world. But according to one company, 2018 could be even better.

According to a new report from CBRE Ltd. Last year there were more than $ 43.1 billion of commercial real estate investments, well above the $ 34.7 billion in 2016.

"Investors are not afraid of Canadian commercial real estate," the report says. "We have a record low vacancy rate, record low unemployment, increasing institutional allocation to real estate and supporting immigration that feeds population growth."

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Register now for news items on the Canadian housing market [19659007] These factors could push the market to new heights in 2018, although the company does acknowledge that it will face new headwinds including rising interest rates.

At the moment, Toronto and Vancouver have a vacancy rate of 3.7 and 5 percent – some of the lowest rates in North America. CBRE expects that this number will drop even further, a strong job market will increase the demand for space.

The report also notes that Toronto and Vancouver demand for other markets such as London, Waterloo, Ottawa, Montreal and Halifax.

That prediction is supported by Morgaurd's Canadian Economic Outlook and Fundamentals Research Report 2018, which tapped Ottawa, Montreal and Calgary as potential commercial real estate hubs.

"A positive performance driver outlook is indicative of further progress in Montreal's retail sector in the short term," the report says. Meanwhile, it is predicted that Calgary will see more activity if investors are looking for high-quality assets in a recovering market.

Finally, Ottawa's economic fundamentals will make it a market to view this year.

"Continued progress is being forecast for the Greater Ottawa Area retail trade in the short term, in line with the recent trend," the report reads. "The healthy fundamental outlook will attract a lot of interest from investors in this market."

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