The report was based on properties in Vancouver, Calgary, Toronto, Ottawa and Montreal with a minimum sale price of $1 million.
The drop in sales has more to do with availability than with slowing demand, according to the report. Retail and multi-unit residential saw the largest declines, while volume fell slightly in the industrial sector, an “investor’s darling” in recent years.
“Investment sales activity is expected to remain buoyant in the near term, despite an increased level of uncertainty in economic and financial markets,” the real estate and property management company’s second quarter update said.
Investors have “competed intensely” for industrial properties, with some rents having doubled or even tripled since the start of the pandemic. Low availability has allowed landlords to raise rents, and Morguard said the “upside pressure” is likely to continue for the rest of this year. Deal volumes in the sector were down only slightly from the record pace of a year ago.
Residential rental rates in multi-unit buildings rose 5.7% in May, the report said, the largest month-over-month increase in three years as immigration and students boosted the request.
Office and retail real estate did not perform as well in the second quarter. Office vacancies rose 20 basis points to 16.5% as organizations transitioned to remote or hybrid working, which Morguard expects to continue in the near term.
Transactions in retail investment properties, meanwhile, slowed to a decade low amid cloudy economic conditions and a more cautious lending environment, the report said.