Commercial Real Estate Gains Momentum in BC
BCREA
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The BCREA Commercial Leading Indicator (CLI) rose 1.4 index points to a record high of 118.4, surpassing the previous high of 117.1 set in the second quarter of 2014.
The CLI has now advanced for seven consecutive quarters. That trend signals significant strength in the economic environment underlying the commercial real estate market. A rising trend in the CLI generally points to growth in investment, leasing and other commercial real estate activity two to four quarters ahead. Given the current trend, we would expect growth in the commercial real estate market to continue for the remainder of 2014 and the first half of 2015.
The third quarter marked the first time in over a year that the economic, employment and financial components of the CLI all contributed positively to gains in the index.
The BCREA Commercial Leading Indicator (CLI) rose 1.4 index points to a record high of 118.4, surpassing the previous high of 117.1 set in the second quarter of 2014.
The CLI has now advanced for seven consecutive quarters. That trend signals significant strength in the economic environment underlying the commercial real estate market. A rising trend in the CLI generally points to growth in investment, leasing and other commercial real estate activity two to four quarters ahead. Given the current trend, we would expect growth in the commercial real estate market to continue for the remainder of 2014 and the first half of 2015.
The third quarter marked the first time in over a year that the economic, employment and financial components of the CLI all contributed positively to gains in the index.
In particular, a surge in office employment and a fourth consecutive increase in average quarterly manufacturing employment pushed the employment component of the index up sharply. In addition, the economic activity component of the CLI continues to trend higher. A rebounding US economy has helped boost shipments of manufactured goods and resurgent spending by BC households has driven retail sales growth to its strongest showing since 2007.
Financial conditions, as measured by the CLI’s financial component, remain positive for commercial real estate activity. The TSX Canadian REIT index finished the third quarter higher as investors continued to look for attractive yields while risk spreads on corporate borrowing remained low and stable.
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