Ottawa commercial real estate sector gets ‘long awaited boost’

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Commercial property sales in Ottawa more than doubled  in the first half of the year, spurred on by the low cost of capital and a depreciated Canadian dollar that’s attracting investors from south of the border, according to a recently published report.

Real estate services firm Colliers International also noted that transaction activity in Ottawa tends to increase in the year following a federal election.

Overall, buyers spent $526.96 million on local commercial properties in the first six months of 2016. That’s up from $233.67 million a year earlier, Colliers said.

Increases were recorded across all asset classes, including office, industrial, retail and multi-residential.

The largest transaction in the second quarter was Minto’s $180.25 million townhouse portfolio sale to CapREIT Apartments.

Minto also sold the Emerald Plaza, a 151,900-square-foot office and retail complex at 1547 Merivale Rd., for $26.1 million in May.

“The long awaited boost that the Ottawa commercial real estate market has been waiting for has finally arrived,” Colliers said in its midyear transaction report. “Despite increased transaction activity, there continues to be an ongoing limited supply of good-quality assets throughout the Ottawa market.”

Many building owners are reluctant to sell their strongly performing properties, the report stated. With strong demand and limited supply, cap rates – one measurement of return that’s calculated by dividing a property’s net operating income by its purchase price – are trending downwards, Colliers said.

Looking ahead, the real estate services firm said demand for office assets is likely to continue to grow now that the threat of further federal government budget cuts has largely subsided.