According to Avison Young’s 2012 Forecast, investment opportunities remain available for investors who are willing to invest in non-coastal markets and in new-vintage commercial mortgage-backed securities (where spreads have widened significantly). However, low interest rates remain the domain of low loan-to-value borrowers in core markets with properties bearing little or no leasing risk.
In the United States, development should remain scarce in most markets and in all property types except apartments where development yields are cresting above going-in yields on purchases of existing product. Though the inflow of troubled assets was slowing approaching year-end 2011, there appears to be increasing velocity of loan sales and longer-term restructurings. It is likely that the continued backlog of delinquent mortgages will remain a significant factor in 2012.
The prospects for 2012 are promising across Canada, with all markets poised to enjoy steady growth. The last year saw strong activity in the office market sector and increasing entry of new U.S. retain chains into Canadian markets. Vacancy rates are decreasing in most of Canada’s industrial markets with some areas anticipating the return of speculative development in 2012. Many markets are experiencing a shift in the usage of industrial space away from manufacturing toward logistics and distribution.
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