Interest Rates Low for Q3 in Vancouver, BC
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Hessam Nadji, CEO of Marcus and Millichap, Shares His Thoughts on the Housing Bubble
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(Posted on Jun 9, 2016 at 07:31PM by Michelle Bogle)
Earlier this week, Hessam Nadji, CEO of Marcus & Millichap, spoke with Yahoo Finance’s Seana Smith about a possible housing bubble and its effects on the commercial real estate sector.Despite the wide-spread fear of a housing bubble, the commercial real estate sector has emerged as a great investment vehicle. It continues to offer yields in the 5-7% range and the sector is not trapped in a cycle plagued by overbuilding or too much supply.
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In fact, Mr. Nadji notes that the fundamentals of the sector are very healthy – even from a retail perspective where the demand for brick and mortar retail has recovered significantly. Convenience, neighbourhood-based retailers are especially feeling the increase, such as grocery stores, fast food chains, casual dining restaurants – all are performing very well.
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Historically low-interest rates have helped both residential and commercial real estate. As rates are anticipated to increase in the future, this may add to the volatility of the market, but at a very small impact, especially since interest rates are expected to increase in slower, smaller increments.Â
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From a commercial real estate perspective, Mr. Nadji believes that even if interest rates do go up, there will still be plenty of runway left in the marketplace in terms of yield versus debt costs.
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Coastal markets, such as Vancouver, Seattle, San Francisco and Los Angeles, are also expected to continue to do well, thanks to steady job growth in the last two years and a solid foundation.
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For more insight on the commercial real estate market in the Lower Mainland, please contact our team of associates in our Vancouver office.
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