It will be another year of robust commercial real estate investment activity in Canada, given healthy demand for quality assets across the country, predicts real estate company Morguard Corporation in a report.

“Investors remain enthusiastic about the Canadian commercial real estate market after a record volume of transactions in 2017,” said Keith Reading, director of Research at Morguard, in a release.

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The downtown areas of Vancouver and Toronto are expected to remain the most coveted markets for investment in 2018, the report says. But with a limited supply of properties available, investors will be forced to look for opportunities further afield. Suburban Toronto, Ottawa and Montreal are also expected to see strong activity levels in 2018 while Alberta, which had previously depressed country-wide statistics, is also showing signs of reanimation.

“Intense bidding for a limited pool of downtown properties will force investors to look elsewhere for opportunity,” says Reading. “Class A properties in suburban markets, particularly those near transit nodes, will be in high demand. Edmonton and Calgary will also see increased activity as investors look for high-quality assets in a recovering market and economy.”

A look at retail properties

In the retail market, the Sears liquidation announcement will put a damper on near-term fundamentals in the country’s shopping centres. The departure will be partially offset by a steady stream of new international entrants to Canada. Reading believes the retail market will continue to offer stable long-term opportunity for Canadian investors, as malls are being re-envisioned as investors and landlords turn to non-traditional tenants including medical, services, entertainment and government agencies as part of their transformation into community hubs.

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With the pace of interest rate hikes expected to remain slow, a continued and abundant flow of low-cost debt and equity capital will power Canadian commercial real estate investment in 2018, notes the report.

Read the full report.

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