Published On: Friday, 08 September 2017
BC Commercial Real Estate Development Surges
BC - The BCREA Commercial Leading Indicator (CLI) posted its largest increase since 2009, rising by 3.7 index points in the second quarter of 2017 to 133.1. That increase represents a 2.8 per cent rise over the first quarter and a 6.6 per cent increase from one
The sustained rise in the CLI reflects strong growth in economic sectors beneficial to
commercial real estate activity. An uptick in economic activity last quarter further reinforces the already strong trend in the CLI.
That signals a continued economic environment that is very supportive of growth in investment, leasing and other commercial real estate activity over the next two to four quarters. The BC economy accelerated in the second quarter of 2017, led by a surge in retail and wholesale trade as well as a significant uptick in the manufacturing sector.
Vigorous employment growth helped push retail sales a remarkable ten per cent higher year-over-year in the second quarter compared while manufacturing sales were up almost 11 per cent.
Employment in the provincial economy is tracking nearly 4 per cent higher through the first half of 2017, and the second quarter saw significant expansion of payrolls in key commercial real estate sectors. The CLI’s measure of office employment rose by close to 12,000 jobs in the second quarter while manufacturing employment posted its first increase since early 2016, rising by 5,500 jobs.
A modest sell-off of Canadian REITs combined with a slight rise in short-term credit spreads tipped the CLI’s financial component into negative territory for the third time in the past four quarters. Rising interest rates due to a somewhat sudden change in sentiment from the Bank of Canada in recent months means tighter financial conditions