VANCOUVER — Canada’s housing market may appear to be on the fast track to recovery but commercial real estate, which includes office buildings, industrial and retail space, still faces “very trying times,” two reports released Monday show.
Commercial real estate transactions fell by more than 50 per cent in the first half of 2009 compared to last year, according to CB Richard Ellis Ltd.
It said transaction value was about $4.9 billion from January to June compared to $10 billion for the same time last year.
The number of transactions also dropped dramatically to 1,569 from 2,542 last year.
“The global recessionary impact on the commercial real estate market has yet to run its course,” said John O’Bryan, vice-chairman of CB Richard Ellis, which provides financing and management services for commercial real estate.
O’Bryan said the commercial market follows the general economy, and is not seeing the same kind of bounce as in the residential real estate sector.
“There is a big contrast between the two markets; one is looking as though everything is back on track and the other one looks as though it’s recovering slowly.”
On Friday, the Canadian Real Estate Association said residential resale activity jumped 18.2 per cent in July compared to last year, setting a record for the month. Buyers are being enticed by record low interest rates and federal tax breaks for new buyers.
BMO Capital Markets called July’s sales figures a “Lazarus-like rise” from the “depths of despair” where Canada’s residential real estate sector was just six months ago.
But the commercial real estate sector isn’t expecting similar miracles.
“It’s a very uneven recovery,” O’Bryan said.
He doesn’t expect the commercial market to hit close to the nearly $32-billion high reached in 2007, which he called an “aberration.”
“We are now tracking this year to do around $10 billion,” he said.