- What Asset classes are behaving differently in the wake of Canada’s lowered interest rates
- Why Multifamily is seeing a bump in activity, one broker said
- What next More rate drops are needed to move industrial property
The Bank of Canada’s moves to lower interest rates are playing out differently among the various property sectors in Vancouver.
The central bank and others began aggressively raising rates in 2022 to thwart rampant inflation. That also had the effect of tamping down property sales. Now, with the BOC cutting interest rates on Sept. 4 – the third cut since June – market players are starting to chart a path forward.
In Vancouver, the multifamily sector is seeing the most immediate return of momentum.
Mark Goodman, principal of Goodman Commercial, said that while offers for development land continue to lag, activity for apartment properties has picked up.
“Since Labour Day, we have been pumping out listing proposals like we’re baking bagels,” Goodman said.
Among those listings are five apartment buildings, including a high-rise in downtown Vancouver set to hit the market in the coming weeks for $20m, he said.
However, other market players don’t expect to see much impact on their portion of the city’s commercial real estate market until later next year. Steve Caldwell, partner and executive vice president at Lee & Associates in Vancouver, says that’s the case for his patch.
“I think what we’re finding is there’s still a lot of people on the sidelines waiting to see [rates] come down a little bit more,” he said. “So, I think we need to see, realistically, another half-point drop before we really start to see a serious increase in activity.”
Caldwell said there are many industrial projects in the pipeline, but it still may be another 18 months before things start moving. He said some asking prices may need to be lowered to help move things along, especially in industrial strata properties.
The sentiment is similar in office properties. Dan Jordan, who recently joined CBRE in Vancouver as a senior vice president, said some buyers seem to be waiting for further rate reductions, but sentiment is shifting to a more positive outlook.
The same sunnier outlook is also emerging in the leasing market.
“From a leasing perspective, we also expect positive changes to come from lower interest rates,” Jordan said. “Companies will be able to borrow again to fund growth and hiring, as many companies have had a hold on growth while they’ve weathered the storm of high interest rates and uncertainty in the market.”
