Resources in Canada's hinterland are driving up demand for offices in the big cities, reports Bloomberg News. The sale of Scotia Plaza, expected to be a $1.5-billion deal, will be a major test of what the market will bear.
"Office vacancies are falling in Toronto and the rest of Canada amid economic growth led by the oil and natural-gas industries. Investor interest in commercial property is rising after the total return on real estate climbed almost 16 per cent last year, the most since 2006 and outpacing gains in the U.S., according to the REALpac/IPD Canada Annual Property Index."
"Low vacancies and increasing demand are pushing developers to build 8.9 million square feet (827,000 square metres) of office space in Canada, the most since the first quarter of 2010, according to CBRE Group Inc. (CBG) Calgary, the centre of the energy business in Canada, is leading the way with more than three million square feet under construction."
"'They have had a commodities-fueled boom across the country,' Dan Fasulo, managing director at property-research firm Real Capital Analytics Inc. in New York, said in a telephone interview. 'The fundamentals of the property markets are in very good shape.'"
"Office property values probably will rise 20 per cent this year in Calgary and about 10 per cent in Toronto and Vancouver as low vacancies help landlords raise rents, according to estimates by CoStar Group Inc. (CSGP)'s Boston-based Property and Portfolio Research Inc. Montreal values are expected to gain four percent."
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Original Source: Bloomberg News