Commercial Real Estate News Blog

Controversy Emerges Over Michigan Business Tax Credits for Industrial Owners

A tax hike on luxury property, is deterring wealthy buyers and pushing Greek real estate prices downward. Economic uncertainties are driving Greek investors to France and London, while once-favored Mykonos and other island locations are being deeply discounted. See the following article from Property...

Although housing prices have increased since May 2009, analysts remain skeptical about the stability of the US housing market and the outlook for the remainder of 2010. With consumer confidence declining to record lows, skyrocketing foreclosure rates and the expiration of the federal homebuyer tax credit...

Demand is outstripping supply in the UK residential rental market, aggravated by the shortage of homes for sale on the market. The recent capital gains tax hike is one factor discouraging landlord investment, impeding housing recovery and leading to record low rental inventory. See the following article...

In line with expectations of economists, housing prices rose more than 4% in May 2010 over the previous year. Industry analysts warned that the rise in prices could be due to the residual effect of the federal first time homebuyer tax credit and strong seasonal trends, and that the outlook for the housing...

As homebuyer activity declined substantially from May to June 2010, US home price trends followed a similar pattern, with prices in three out of four property categories declining. Price declines were the result of reduced housing demand and the expiration of the federal homebuyer tax credits, leading...

Toronto’s housing market roared back to life in the first half of 2010, with single-detached homes and condominium apartments and townhouses posting unprecedented double-digit gains in average price in most districts, according to a report released today by RE/MAX Ontario-Atlantic Canada. This is in stark contrast to the July 2009 RE/MAX report that found that values in approximately 80 per cent of neighbourhoods surveyed in Toronto had depreciated over the same period in 2008.

RE/MAX examined 63 Toronto Real Estate Board (TREB) districts in the single-detached category between January and June of 2010 and found that 85.7 per cent experienced double-digit gains. Mississauga’s Lorne Park (W13) led in terms of percentage increase in average price with a 30.2 per cent upswing in the first six months of the year, bringing year-to-date values in the area to $880,373 (vs. $676289 in 2009 and $830,041 in 2008). Markham (N01) ranked second with a 27.7 per cent jump to $779,168 (vs. $610,322 in 2009 and $683,050 in 2008) while Armour Heights, Bathurst Manor (C06) came in a close third at 27.5 per cent (rising to $732,535 from $574,599 in 2009 and $589,808 one year earlier). Mississauga’s Creditview, Erindale area (W16) secured fourth spot with an average price of $561,973—up 26.5 per cent over 2009’s $444,221 and 2008’s $476,877. Rounding out the top five was York Mills, Hogg’s Hollow, Bridle Path (C12) with a 26.2 per cent increase over last year and an average price of $1,868,591 (vs. $1,480,296 in 2009 and $1,580,851 in 2008).

“While first-time buyers dominated housing markets during the first half of 2009, move-up buyers ruled during January to June of 2010,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Rising interest rates and the introduction of the Harmonized Sales Tax (HST) in the province helped drive activity, with more than 50,000 sales reported year-to-date—a figure on par with record 2007 levels.”

As in years past—the exception being 2009—the second half of the year will be more tempered, with price appreciation moderating somewhat in most neighbourhoods. The one exception to the rule will be the hot pocket areas that continue to experience limited inventory.

With affordability a growing issue for many in the Toronto market, the city’s vast supply of existing condominium apartments and townhomes offer a financially attractive alternative. Like single-detached homes, however, condominium prices were on the upswing in the first six months of the year in the 59 TREB districts examined—with 61 per cent reporting double-digit increases.

The Danforth, East York (E03) was the top performing condominium market in terms of price appreciation—with values up 28.2 per cent to $222,421. While the increase is significant compared to the same period in 2009, it’s a more moderate 15 per cent ahead of the $195,019 reported in 2008. Yorkville (C02) secured second spot, with a 22.6 per cent increase in values, bringing average price to $653,745—a serious uptick over the 2009 level of $553,302 but only a nominal 5.6 increase over 2008’s $619,151. Markham (N01) took third place with an increase of 22.1 per cent to $332,590 over the 2009 figure ($272,316). Bayview Village (C15)—Toronto’s newest condominium corridor—saw a 19.6 per cent increase, with values rising to $331,063. North York (C14) continued to experience upward momentum during the first half of the year, with average price on the Yonge St. line up 19.5 per cent to $363,685, compared to the $304,342 reported during the same period in 2009.

Overall, single-detached homes in TREB’s North district (north of Steeles Ave.) saw the greatest percentage increase, with year-to-date average price rising 17.5 per cent to $617,723 (compared to $525,635 one year ago). Not surprisingly, condominium apartments and townhomes in the central core experienced the most significant upswing, with average price in TREB’s Central district rising 16.8 per cent to $385,996, up from $330,517 one year ago.

“Both housing types experienced serious percentage increases year-over-year – yet its important to keep those price hikes in perspective,” says Polzler. “Last year, 80 per cent of those districts experienced a decline in value. The bounce-back—fuelled by unprecedented market conditions including a severe shortage in listing inventory—simply returned average prices to their normal course.”

Source: RE/MAX Ontario-Atlantic Canada

Residential sales slipped 2.6 percent from March.

Canadian home resales slowed in April from the previous month while new listings climbed, suggesting the country's real estate market could soon start to cool after a year of surging prices. Even so, sales of existing homes still showed a big jump from the same month last year, according data on Monday from the Canadian Real Estate Association, with prices rising at a double-digit pace year over year.

Residential housing has become an important driver of the Canadian economy, even during the recession, spurred partly by low interest rates. It also gave rise to a fiery debate on whether the housing sector was forming a bubble, a charge that policymakers swiftly downplay.

All told, 42,078 homes changed hands in April, up 20.1 percent from the same month last year. But sales slipped 2.6 percent from March, the third decline in four months, and have fallen 6.8 percent from the peak reached in December.

The cooler pace of activity is in line with a long-held view by many economists, who see the market slowing after the spring as more homes are put up for sale and interest rates begin to rise.

Some homeowners may also move sooner in order to avoid extra costs associated with new, harmonized sales tax (HST) regimes, set to begin July 1 in Ontario and British Columbia, and this could add to a front-loaded year of sales and pricing activity.

"Prices may see one last uptick in the next few months, but are expected to simmer down notably in the second half," said Doug Porter, deputy chief economist at BMO Capital Markets.

"Indeed, outright price declines are certainly a very real possibility in Ontario and B.C. amid much more moderate activity after the HST kicks in."

CREA said a slowing market in British Columbia was responsible for more than half the decline for the year. Ontario and Quebec, two of the country's larger markets, remained close to record levels in April.

The number of new listings rose to 99,901, surpassing the previous April record, set in 2008, by 0.6 percent. The average national price rose 12.2 percent to C$344,968 ($331,700). The rising supply of homes for sale could dampen prices in the months ahead. Sales may also cool as higher mortgage rates and rising prices chip away at demand, and overall housing investment falls into line with the broader economic recovery.

"The pace of moderation is expected to be measured and orderly," said Millan Mulraine, a senior strategist at TD Securities.

Source: Canadian Real Estate Association

TORONTO, April 13 /CNW/ – Whiterock Real Estate Investment Trust (TSX:WRK.UN) announced today that it has acquired three high quality, flex office assets with significant below market leases in Regina, Saskatchewan. In keeping with its active acquisition program, Whiterock and a co-owner acquired the three business centers for $17.7 million before closing costs. The in-place AFFO from the properties will add approximately $0.03 per unit, or 2%, to Whiterock’s annualized AFFO.

Whiterock’s partner on these acquisitions is Return on Innovation Capital Inc. (“ROI Capital”), an investment firm based in Toronto that specializes in private placement investments, including a focus on high quality properties with visible growing cash flow streams backed by solid covenants and longer term leases. With over $700 million in assets, ROI Capital is one of the fastest growing investment firms in Canada.

The portfolio includes three multi-tenant flex office buildings located in Regina, Saskatchewan. The assets are based in the prominent Ross Industrial Park, which is the primary industrial park in Regina, and includes the McDonald Business Centre, the Henderson Business Centre and the Imperial Business Centre. Access to the properties is provided by the close proximity to the Trans-Canada Highway and major arterial roads, Ring Road and Highway 1. The portfolio has been maintained to institutional standards with over $900,000 in capital upgrades in the past four years.

Collectively, the centres are 96% occupied and comprise approximately 183,000 square feet of rentable space on over 12 acres of land with an excellent mix of office, industrial and retail space. Each property contains ample surface parking.

Whiterock’s 40% equity investment in the properties, net of debt, totals approximately $3.1 million, with an in-place AFFO return of approximately 13%. Whiterock used cash on hand to finance its investment in these properties.

Whiterock’s owned and managed portfolio totals 5.6 million square feet across 56 properties, with a weighted average lease term of approximately 7 years. 52% of the portfolio consists of government and investment grade tenants. 100% of distributions made in prior years were classed as a return of capital for tax purposes. At the close of market on April 12th, 2010, Whiterock’s units provided a yield of 11.1%.

One in three homes over-assessed says tax expert