Commercial First Blog

Continued Stabilizing Commercial Activity in 2019 Q2

Read the full Commercial Leading Indicator Report

The BCREA Commercial Leading Indicator (CLI) rose by 0.7 points to 135.7 in the second quarter of 2019. Compared to this time one year ago, the index is unchanged.

Slowing provincial economic activity continued in the second quarter of 2019, with declines in retail sales and wholesale trade more than offsetting gains in the manufacturing sector. This meant the economic activity component of the CLI remained negative for the fourth consecutive quarter. Meanwhile, employment was up in office and manufacturing, resulting in a positive change in the employment component of the CLI. The financial component of the CLI was positive for a second straight quarter. The underlying trend in the CLI has been relatively flat over the past four quarters, suggesting a continued stabilizing environment for commercial real estate activity.

Following several years of robust growth, the BC economy continues to slow in the first half of 2019. Broad-based declines in retail sales put a drag on economic activity, particularly in the sub-sectors of motor vehicles and parts, food and beverage, and gasoline.

Following several years of robust growth, the BC economy continues to slow in the early part of 2019. The economic activity component of the CLI posted a third consecutive quarterly decline, led by the personal and household goods, and building material and supply components of wholesale trade.

Employment growth in key commercial real estate sectors was strong in the second quarter. Office employment in finance, insurance, real estate and leasing was up by 6,700 jobs. This measure of office employment now sits at an all-time high, signalling strong future demand for office space. Meanwhile, manufacturing employment rebounded by 6,300 from the previous quarter.

The CLI’s financial component was positive in the second quarter, as a narrowing of short-term credit spreads offset a decline in benchmark Canadian REIT prices.


For more information, please contact:

Brendon Ogmundson
Deputy Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
Email: bogmundson@bcrea.bc.ca

Kellie Fong
Economist
Direct: 778.357.081
Mobile: 604.366.6511
Email: kfong@bcrea.bc.ca


BCREA is the professional association for more than 23,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

To demonstrate the profession's commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods.



Fewer Commercial Real Estate Sales to Start 2019

Real Estate Board of Greater Vancouver - June 18, 2019.
Commercial real estate sales in the Lower Mainland declined in the first quarter (Q1) of 2019 compared to the active market experienced across the region last year.

There were 318 commercial real estate sales in the Lower Mainland in Q1 2019, a 42.1 per cent decrease over the 549 sales in Q1 2018, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

The total dollar value of commercial real estate sales in the Lower Mainland was $1.531 billion in Q1 2019, a 57.3 per cent decrease from the $3.587 billion in Q1 2018.

“Much like we’ve seen in the residential market, there’s been reduced demand in the commercial real estate market through the first quarter of the year,” Ashley Smith, REBGV president said. “With housing inventory at a five-year high and more supply on the way, the development community appears to be taking a more cautious approach.

Q1 2019 activity by category
Land
: There were 87 commercial land sales in Q1 2019, which is a 63.1 per cent decrease from the 236 land sales in Q1 2018. The dollar value of land sales was $709 million in Q1 2019, a 61.3 per cent decrease from $1.832 billion in Q1 2018.

Office and Retail: There were 131 office and retail sales in the Lower Mainland in Q1 2019, which is down 26.8 per cent from the 179 sales in Q1 2018. The dollar value of office and retail sales was $367 million in Q1 2019, a 72.6 per cent decrease from $1.339 billion in Q1 2018.

Industrial: There were 92 industrial land sales in the Lower Mainland in Q1 2019, which is down 20.7 per cent from the 116 sales in Q1 2018. The dollar value of industrial sales was $392 million in Q1 2019, a 35.1 per cent increase over $290 million in Q1 2018.

Multi-Family: There were eight multi-family land sales in the Lower Mainland in Q1 2019, which is down 55.6 per cent over the 18 sales in Q1 2018. The dollar value of multi-family sales was $62 million in Q1 2019, a 50.2 per cent decrease from $125 million in Q1 2018.

Category definitions
Land includes properties that are holding properties, farmland, garden centres, redevelopment sites, land assembly sites, vineyards, etc.

Office and Retail properties are defined by the zoning according to each municipality and must have a building on the site. This category includes: Office, office condo, retail, retail condo, shopping centre, gas station, car dealerships, banks, community centres, day care, educational facility, institutional, golf courses, movie theatre, hotel, churches, restaurants, truck stops and others.

Industrial properties are also defined by the zoning according to each municipality and must have a building on the site. This includes warehouses, warehouse bays and multi-bay warehouses.

Multi-Family properties include: nursing homes, high rises, low rises, and any condo or townhome properties containing four or more units with at least one zoned for commercial use.

Download the Q1 2019 commercial stats package

CLI Points to Stabilizing Commercial Activity in 2019 Q1

Vancouver, BC – June 5, 2019. The BCREA Commercial Leading Indicator (CLI) rose by 1.3 points to 135.2 in the first quarter of 2019. Compared to this time one year ago, the index is 1.1 per cent higher.

“While economic activity remained tepid at the start of 2019, a rebound in financial markets pushed the CLI higher,” says BCREA Deputy Chief Economist Brendon Ogmundson. “That signals a lower risk environment, but a slowing economy may impact future commercial real estate activity.”

Following several years of robust growth, the BC economy continues to slow in the early part of 2019. The economic activity component of the CLI posted a third consecutive quarterly decline. Employment in key commercial real estate sectors was mixed. The CLI measure of office employment now sits at an all-time high, which signals strong future demand for office space. Volatile financial markets led to recent swings in the underlying CLI index, but the trend remains flat, pointing to stable commercial activity in 2019.

To view the full BCREA Commercial Leading Indicator index, click here.

For more information, please contact:
Brendon Ogmundson
Deputy Chief Economist
Direct: 604.742.2796
Mobile: 604.505.6793
Email: bogmundson@bcrea.bc.ca

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