LOOK AHEAD 2018: Canada to see ‘sustained high level’ of transactions

Foreign investors will drive Canada’s uptick in transactions, which has seen a pickup even as US volume has declined, says LaSalle Investment Management’s Bill Maher, Americas head of research.

Canada, unlike its southern neighbor, will see sustained investment volumes in 2018 compared with the previous year, predicts Bill Maher, LaSalle Investment Management’s head of Americas research.

“2017 will be a record year for transaction volumes in Canada, up substantially from 2016,” he says. “You have the opposite in the US. Canada is becoming more liquid as the major players – largely domestic pension funds – are selling some of their properties in Canada to diversify globally.”

Canada’s market has long been dominated by sizable domestic pension funds that rarely sell prime assets, leading to its perception as a closed market. But as those top names look out of the country for investments, foreign investors are looking in.

“We’re seeing increasing interest by global investors, and probably more non-US than US,” Maher says. “People look at Canada as a place where they want to be long term. Most global investors have zero weight to Canada and they’re realizing they’re missing out.”

In 2018, he expects the country to be politically stable – also in contrast to its southern peer – with a continued technology boost in Vancouver and Toronto.

“They’re seeing some US companies set up shop there, as it’s much easier to get visas for tech and knowledge workers into the Canadian markets, and a fair number of non-US tech folks want to be in Canada. That’s creating what we call edge-of-core or edge-of-CBD, with companies looking for that creative space.”

In one example, Maher highlights Toronto’s outskirts, where warehouses are being converted to tech hubs.

Canada’s resource-oriented markets – such as Calgary in Alberta, which relies on oil and gas businesses – have always suffered from more volatile price swings than Toronto, including an economic pullback caused by the drop in oil prices.

“Those markets definitely hit bottom, and I think it’ll be a slower recovery,” Maher says. “We view it as a place to get good value now.”

LaSalle is betting on the country’s real estate through an open-ended core fund launched in December.