Canadian

Multifamily
Overview
Demand Drivers &
Market Fundamentals
Mid-Year 2019

CBRE Research
Part 1/
Setting the
Stage
Canadian commercial real estate experienced an multifamily sector were 9.8% as of Q1 2019, second only to
unprecedented decade of demand and returns since the the industrial sector, which has also benefitted from a recent
Global Financial Crisis in 2008. Robust economic growth, period of tremendous rent recalibration.
employment gains in the technology and other high-skilled
While the multifamily sector’s ability to generate consistent
service sectors, strengthening trade, the rapid growth
cash flows and provide defensive positioning against
of ecommerce and shifting demographics have pushed
economic cycle downturns has always made it an enticing
fundamentals across the commercial real estate landscape
option for investors, the current landscape is stronger than
to record levels. Strong property fundamentals have in turn
it has been at any other time in history. Performance drivers
led to commercial real estate acquisition volumes reaching
including a growing population, rising home ownership
a 15-year high of $49.3 billion in 2018, while cap rates have
costs and lack of rental supply are becoming entrenched in
compressed to 10-year lows.
many markets across the country, which means the appeal
Even against a backdrop of impressive results, the of multifamily assets is likely to increase.
multifamily sector stands out from the pack as the top
performing commercial property type in North America.
Figure 2: REALPAC/IPD Canada Property Fund Index
Based on the Canada Mortgage and Housing Corporation’s
(CMHC) 2018 data release, the national average multifamily Total Returns as of March 2019 (12mo Trailing)
vacancy rate ended the year at 2.4%. This was below the 16.0%
14.1%
10-year average of 2.6%, and well below the national average 14.0%
vacancy rate for each of the office, industrial and retail 12.0%
sectors, both here and in the United States. 9.8%
10.0%
With apartment buildings at near full occupancy in markets 8.0% 7.4%
from coast to coast, rent growth has accelerated. Over the 6.0% 5.2%
last two years, average rents for purpose-built rental units 3.7%
4.0%
have grown by 4.4% annually at the national level, and by 2.0%
5.0% in Toronto and by 7.1% in Vancouver. This rapid rise
0.0%
of rental rates has resulted in strong investment returns Retail Office Multifamily Industrial All Property
for landlords. Total annualized returns for the Canadian
Source: MSCI, May 2019.

Figure 1: North American Vacancy Rate Comparison

Office 12.2%

Retail 8.8%
US

Industrial 7.1%

Multifamily 4.0%

Office 11.3%

Retail 3.4%
Canada

Industrial 3.1%

Multifamily 2.4%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

Notes:
i) Industrial figures are availability rates, Source: CBRE Research, CBRE Econometric
ii) Retail rates are composite figures including Neighbourhood, Community, and Strip assets, Advisors and Canada Mortgage and Housing
iii) Canadian multifamily figures as of October 2018. Corporation, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 2

Part 2/
Drivers of
Multifamily Figure 3: G7 Population Growth
Average Annual Population Growth
1.20%
1.00%
0.80% 0.94%
0.60%

Population Growth
0.63%
0.40%
0.46% 0.46%
0.20%
0.00%
Canada’s population grew by 1.1% per year from 2009 -0.20% -0.04% -0.03% -0.38%
to 2018 and is expected to continue expanding at a rate -0.40%
of 0.9% over the next four years, outpacing all other G7 Canada United United France Italy Germany Japan
States Kingdom
nations by a considerable margin.
2009-18 2018-23
Much of this momentum is being fueled by immigration Source: International Monetary Fund, March 2019.
due to the fact that, unlike other global leaders, Canada
remains supportive of immigration as an economic Figure 5: New Immigrant Targets 2019-2021
imperative. The total number of newcomers has 1.3%
increased substantially over the last four years
14.5% Economic Programs
and immigration accounted for 80.5% of Canada’s
population growth in 2018. Family Programs

The federal government announced a plan in 2018 to 26.5% 57.7% Refugees and
welcome one million new immigrants into the country Protected Persons
between 2019 and 2021. While the new migrants will be Humanitarian and
admitted through a mixture of economic, family, refugee Other
and humanitarian programs, the bulk of those admitted
Source: Government of Canada, 2018.
will be approved on skill-based or economic grounds.

As population has grown, so too has demand for Figure 6: Canadian Population Growth by Market
housing, particularly for purpose-built rental units. Net International Migration Annual Average | ‘13 to ‘18
While immigration has been spread across the country, 100,000
the greatest impact has been felt in major urban centres 80,000

such as Vancouver, Toronto and Montreal and it is no 60,000

coincidence that these markets, primarily Vancouver 40,000

and Toronto, are also those which have seen the greatest 20,000

increase in demand for multifamily rental options. 0

Source: The Conference Board of Canada, Q2 2019.

Figure 4: Canadian Population Growth Breakdown

450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
-
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Net International Migration Natural Increase in Population

Source: The Conference Board of Canada, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 3

Rising Home
Ownership Costs
Housing Prices have been a growing concern in Canada
Figure 8 - Canadian Housing Affordability Comparison
over the past few years. The largest effects have been felt
in Vancouver and Toronto where prices for a variety of 15.0

Vancouver
housing alternatives have grown substantially since the end 14.0
of 2014. In an attempt to combat this rapid growth, each of
13.0
the British Columbia and Ontario provincial governments
put forth new housing regulations in late 2016 and early 12.0

2017 aimed at cooling foreign investment and speculative 11.0

purchasing. While these measures, in conjunction with
10.0

Toronto
new federal mortgage requirements, did cool the markets,

Housing Affordability Index

prices are still comparable to where they were at the time 9.0

the regulations were implemented. Benchmark home prices 8.0

Waterloo
in Vancouver and Toronto sit just below $1.0 million and
7.0
$800,000 today.

Montreal
London
6.0 Severely

Winnipeg

Edmonton
Calgary
Ottawa
Recent reports have shown that when comparing Unaffordable
5.0

Halifax
affordability (the relationship between average home Seriously Unaffordable
4.0
prices and median incomes) across global cities, Canadian
Moderately Unaffordable
markets consistently rank as some of the least affordable 3.0
Affordable
in the world. According to Demographia’s annual survey 2.0
of global housing affordability, Vancouver and Toronto are
1.0
ranked as the second and tenth least affordable cities in the
world for housing. No major Canadian city was classified as -
0 11
affordable in this report, although some markets including
Major markets classified as metropolitan areas with
Winnipeg, Edmonton and Halifax were close to this
more than 1,000,000 population.
threshold with scores below 3.7.
Median Multiple indicator is median house price
divided by median pre-tax gross household income.
While rising home prices are not necessarily a problem by
Source: 15th Annual Demographia International
themselves, the chief issue is that income growth has not Housing Affordability Survey.
kept pace with the growth witnessed in housing prices.

Figure 7 - Effects of Government Regulation

Benchmark Home Price
$1,150,000 National B-20 Update
Vancouver
B.C. Foreign $998,700
Buyers Tax
$950,000
Ontario Fair Toronto
Housing Plan $798,500

$750,000
National
Aggregate
$625,300
$550,000 Ottawa
$424,400

Calgary
$350,000 $419,900
Montreal
$365,700

$150,000 Edmonton
$323,900
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Regulations National Toronto Vancouver Calgary Edmonton Montreal Ottawa
Aggregate
Source: CBRE Research, The Canadian Real
Estate Association, June 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 4

RISING HOME OWNERSHIP COSTS -
CONTINUED
When looking at the 10-year period preceding the end of
Figure 10: G7 Household Debt Levels
H1 2019, average Canadian incomes have risen by a total of
Household Debt Ratio
29.3% according to the Conference Board of Canada. For Debt to Disposable Income
their part, purpose-built rental rates have grown by a slightly
180
higher 31.1%. While these rates do differ, the gap between
them is small and the growth pattern has been consistent: 160
synchronized and linear. This however was not the case for
140
home ownership costs. Home and condominium prices
have grown by 66.7% and 68.4%, respectively, over this same 120
time period.
100
Income requirements are also not the only point of
consideration. A further impediment to home ownership 80

for many Canadians is access to capital for the 10-20% 60

down payment required upon signing. For instance, down
payments for condos in large cities typically total over 40
$100,000 at a minimum. This is complicated further by the
20
fact that Canadians have some of the highest debt levels in
the developed world. Based on the most recent figures from 0
the OECD, the Canadian debt ratio (the ratio of National Canada United France United Japan Germany Italy
Kingdom States
debt to disposable income) sits at 180.9. The next most
indebted G7 nation, the United Kingdom, has a ratio of only Source: Organisation for Economic
Co-operation and Development, 2019.
148.9.

As home ownership costs have risen, an increasingly

large number of Canadians have been added to the renter’s
pool and this dynamic, in conjunction with population
growth, has driven demand for comparatively affordable
multifamily units.

Figure 9: Rising Canadian Home Ownership Costs

Growth Rate
(Indexed to 100 @ H2 2009)

170.0

150.0

130.0

110.0

90.0
H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Income per Capita Rental Rate (2-bdrm) Ownership Cost (Single Detached) Ownership Cost (Condo)
Source: CBRE Research, Canadian Real Estate Association, Canada Mortgage and
Housing Corporation, The Conference Board of Canada, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 5

 A Toronto & Vancouver Case Study
The result of this growing disconnect between income
and home pricing is that home ownership has become a
challenge for many Canadians living in major cities. This
is especially true in Toronto and Vancouver where home
prices have risen to be the highest in the nation.
Based on recent home resale prices in the City of
Toronto, it would require a household income of
$115,400 per year to afford mortgage payments for an
average condo. For a semi-detached home, this figure
rises to $156,600 and for a single detached home, to
$195,700. Environics Analytics estimates 2019 median
household income for region to be only $84,900 before
income taxes.
In the City of Vancouver, this gap is even more
pronounced. The income requirements for single
detached or attached homes are $315,700 and $145,800,
respectively, yet the median before-tax household income
for the region is only $82,100.

Figure 11-A: City of Toronto Housing Affordability Requirements

Calculated assuming a 33%

allocation of income towards
Single $195,700/yr housing, 20% down payment, 25
Detached
year amortization period, 3.19%
fixed mortgage, 2019 City of
Toronto property tax rates, & typical
Semi-Detached $156,600/yr condo fees.
Average price for 416 area for
detached, semi-detached and
Condo $115,400/yr condo apartment.
Source: CBRE Research, Toronto
Real Estate Board (July 2019),
GTA Median Household Bank of Canada, City of Toronto,
Income, before Income $84,900/yr Environics Analytics, 2019.
Taxes

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000

AFTER TAX SALARY REQUIREMENTS

$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000

Figure 11-B: City of Vancouver Housing Affordability Requirements

Calculated assuming a 33%

allocation of income towards
Single $315,700/yr housing, 20% down payment, 25
Detached year amortization period, 3.19%
fixed mortgage, 2019 City of
Vancouver property tax rates, &
Attached $145,800/yr typical condo fees.
Average of benchmark price for
Vancouver East and Vancouver
West areas. Consistent with
Condo $112,100/yr
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 REBGV methodology, townhouse
benchmark used in place of
GVA Median Household attached benchmark.
Income, before Income $82,100/yr Source: CBRE Research, Real Estate
Taxes Board of Greater Vancouver
(July 2019), Bank of Canada,
$0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 City of Vancouver, Environics
Analytics, 2019.
AFTER TAX SALARY REQUIREMENTS

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 6

Lack of Supply
On the other side of the coin sits supply of rental units.
Outside a few exceptions, rental inventories in major
Canadian markets are limited compared to their global
peers. The largest rental market in Canada is Montreal
with just under 600,000 units, a formidable total. Toronto
follows with 313,000 units, slightly over half of Montreal’s
total, and then comes Vancouver with only 109,000 units.
Adding secondary market rental units, privately owned
condominium rentals, to these totals closes the gap in
certain cases, but it’s clear that renters in most markets
across the country remain underserved.
Factoring in the population base of each city sheds further
light on the lack of rental housing. For example, there are
approximately 21 people living in the Greater Toronto Area
(GTA) for every unit of purpose-built rental housing. When
secondary market rentals are included, this figure drops
to a more reasonable, but still high, 15. These figures are
similar in the metropolitan areas of each of Vancouver,
Edmonton, Winnipeg, Ottawa and Waterloo. For reference,
the number of persons per rental unit is 7 in New York, 9 in
Los Angeles and 13 in Chicago. While this metric reflects
poorly on many of the larger Canadian markets, there are
some exceptions. In Montreal there are only seven people
per unit of multifamily housing, while in Halifax, London
and Winnipeg this ratio climbs no higher than 14.
The primary reason for the low multifamily inventory levels
in many Canadian cities is that high-rise developers in
major markets have traditionally chosen, for a variety of
reasons, to develop condominiums as opposed to purpose-
built rental units. The high cost of land and other financial
considerations have made rental projects comparatively
less profitable in highly competitive marketplaces. In each
of Toronto, Vancouver, Calgary, Edmonton, Ottawa and
Kitchener-Waterloo, over 50% of all high-rise apartment
units currently under construction are condominium units.
In Toronto, 89.1% of high-rise units under construction are
condominiums, while in Vancouver this figure is 75.9%.
Unsurprisingly, markets with greater rental inventories,
namely Montreal, Halifax, Winnipeg and London, have
much more balanced construction environments. In
Montreal, London and Winnipeg between 57.5% and 66.0%
of new high-rise units under construction are purpose-built
rentals, while in Halifax this number is as high as 92.4%.

Figure 12: Rental Supply-Demand Imbalance

Rental Inventory (units) Persons per Rental Unit
700,000 45.0
40.0
600,000 x38
35.0
500,000
30.0
400,000 25.0
x24 x24
x22
300,000 x21 x21 20.0
x19
x15 x16 x15 15.0
x15 x14
200,000 x12
x13 x14 10.0
x7 x9 x11
100,000 x7 x8 5.0
- 0.0
Montreal Toronto Vancouver Edmonton Ottawa Winnipeg Halifax London Calgary Waterloo

Primary Market Inventory Secondary Market Inventory Persons per Unit of Primary Rental Inventory Persons per Unit of Total Rental Inventory
Source: CBRE Research, Canada Mortgage and Housing Corporation, October 2018.

Figure 13: High Rise Residential U/C Inventories

Units U/C
60,000

50,000

40,000

30,000

20,000

10,000

0
Toronto Vancouver Montreal Calgary Edmonton Ottawa Winnipeg Halifax London Waterloo
Condo Purpose-Built Rental
Source: CBRE Research, Canada Mortgage and Housing Corporation, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 7

LACK OF SUPPLY - CONTINUED
With limited affordable housing options, a large share of
prospective renters are being serviced by the secondary
rental market; condominium rentals. In addition to being
significantly more affordable than condominium rentals,
multifamily units also offer better security in terms of
rental tenure. The combination of lower monthly costs
and increased long term security has only intensified the
demand for purpose-built property units.
While supply of new rental housing not meeting demand
continues to be an issue, rental rate growth along with a
variety of government programs are beginning to shift the
tides. The share of rental units as a percentage of the total
high-rise units under construction has been increasing
steadily over the last five years. While still not fully balanced,
rental’s share of the new construction pipeline is now 35.9%
based on the most recent data.
Despite this slow shift towards more rental construction,
new supply is not likely to meet demand for the
foreseeable future.

Figure 14: Comparison of Rental Options

Average 2-bedroom Monthly
Rental rate
$3,000

$2,500
$2,393
$2,000
$2,034

$1,500 $1,649 $1,614 $1,579

$1,467 $1,533
$1,392 $1,385 $1,363
$1,301 $1,272 $1,246
$1,210 $1,156 $1,179 $1,208 $1,200
$1,000 $1,087

$809
$500

$0
Toronto Vancouver Waterloo Ottawa Calgary Edmonton Halifax Winnipeg Montreal London
Condominium Rental Purpose-Built Rental

Source: CBRE Research, Canada Mortgage and Housing Corporation, October 2019.

Figure 15: High Rise Residential U/C Inventory Analysis

Rental Units Under Construction Ratio of Rental Units Under Construction

80,000 80%

70,000 70%

60,000 60%

50,000 50%

40,000 40%

30,000 30%

20,000 20%

10,000 10%

0 0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Rental Units Under Construction Rental Share of Apartments Under Construction

Source: CBRE Research, Canada Mortgage and Housing Corporation, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 8

Part 3/
Multifamily’s
Enduring Appeal
The increased demand and limited supply within the The continued tightening experienced over the last few years
multifamily sector have led to a tightening of the market has resulted in rapid rent escalation. Average multifamily
and record fundamentals across a breadth of metrics. As rental rates are at or near 10-year highs in practically every
highlighted above, the national average multifamily vacancy market. Meanwhile no Canadian city has seen their average
rate in Canada sat at 2.4% as of the CMHC’s 2018 data rental rate figure fall since 2017.
release. This tightening has not been restricted to select
markets. Six Canadian markets are seeing vacancy rates at or
within 30 basis points of their 10-year lows. Vancouver and
Toronto continue to be the tightest markets in the country
with occupancy rates of nearly 99.0%.

Figure 16: Canadian Multifamily Fundamentals by Market

Vacancy Rates 10-Yr Comparison
8.0%

7.0%

6.0%
5.3%
5.0%

4.0% 3.9%

3.0% 2.9% 2.9%

2.0% 1.9% 2.1%

1.6% 1.6%
1.0% 1.0% 1.1%

0.0%
Vancouver Toronto Ottawa Halifax Montreal London Winnipeg Waterloo Calgary Edmonton
10-Yr Low 10-Yr High Current Vacancy Rate

Source: CBRE Research, Canada Mortgage and Housing Corporation, October 2018.

Figure 17: Canadian Multifamily Fundamentals by Market

Rental Rates 10-Yr Comparison
$1,600
$1,507
$1,400
$1,360
$1,200 $1,214
$1,125 $1,111 $1,070 $1,061 $1,057
$1,000 $968
$800 $794

$600

$400

$200

$0
Vancouver Toronto Ottawa Edmonton Calgary Waterloo Winnipeg Halifax London Montreal
10-Yr Low 10-Yr High Current Average Rent per Unit

Source: CBRE Research, Canada Mortgage and Housing Corporation, October 2018.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 9

Not only are rents growing, but the pace at which they are
growing is also escalating rapidly. Over the decade preceding
2016, multifamily rents in major Canadian markets grew
between 1.9% and 3.4% annually. Over the last two years,
however, annual rent increases have averaged 7.1% in
Vancouver and 5.0% in Toronto. Note that these figures
include all purpose-built rental units, including those which
haven’t turned over, where potential rent escalations are
bound by rent control regulations. In certain provinces
including British Columbia, Ontario and Quebec, rent
increases are capped at a prescribed value, typically linked
to inflation. In units where tenants have turned over, rent
growth has been substantially more pronounced than those
reported by CMHC.

Figure 18: Major Market Rent Growth Trends

Annual Rent Growth Comparison
8.0%

7.0% 7.1%

6.0%

5.0% 5.0%
4.8%
4.4% 4.3%
4.0% 3.9%
3.4% 3.4% 3.5%
3.0% 2.9%
2.6% 2.7% 2.7%
2.5%
2.0% 2.2% 2.0%
2.0% 1.9%

1.0%
0.5%
0.2%
0.0%
Vancouver Toronto London Ottawa Montreal Halifax Winnipeg Waterloo Calgary Edmonton
Preceding Decade ('07 to '16) Last Two Years ('16 to '18)
Source: CBRE Research, Canada Mortgage and
Housing Corporation, October 2018.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 10

INVESTMENT LANDSCAPE
The strong market fundamentals have naturally attracted
new capital to the sector. National investment volumes
for multifamily assets have escalated for four consecutive
years, reaching an all-time high of $8.3 billion in 2018.
Investment volumes through the first half of 2019 have also
been strong and the sector is currently on pace to reach the
second highest yearly investment volume total on record.
Meanwhile, the buyer pool for the asset class has become
increasingly institutionalized, with major groups such as
Starlight, Blackstone, Timbercreek, Realstar and Akelius
making substantial acquisitions over the last few years.
landlords have been hesitant to sell properties given the
overall strength of the asset class and considerations to the
capital gains implications triggered when assets are sold.
Additionally, consecutive years of relatively limited new
construction have contributed to pent-up demand for core
multifamily assets in major markets. The lack of investment
opportunities and the competitiveness of an increasingly
sophisticated buyer pool has had major effects on pricing.
Based on CBRE’s Cap Rate Survey Report from Q2 2019, the
multifamily sector had the lowest average cap rate figure of
any asset class in Canada at 4.41%.

While this investment activity has been impressive, it is

likely that these figures would be significantly greater if
not for a lack of investment opportunities. Understandably,

Figure 19: Multifamily Investment Volume Figure 20: 2018 Purchaser Profile Breakdown
Investment Volume ($B)
Institutional
$9.0 2.5%
$8.0
$8.3B

$7.0 REIT/REOC
10.9% Private
$6.0 Canadian
$6.3B
$6.0B

Foreign Investor
$5.7B

$5.0
$5.5B

Investor 31.0%
$4.0 12.9%
$4.2B

$4.0B
$3.7B

$3.0
$3.6B
$3.2B

$2.9B

$2.0
$2.4B

Private Equity
$1.0 16.5%
Pension
$0.0 Fund/Advisor
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

H1 2019

26.2%

Multifamily FY Pace

Source: CBRE Research, Realnet Canada, Real Capital Analytics, 2018.

Source: CBRE Research, Realnet Canada, RealTrack Limited, Collette Plante, JLR Land Title Solutions, Real Capital Analytics, Q2 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 11

INVESTMENT LANDSCAPE -
CONTINUED
In major cities, assets now regularly trade for cap rates Figure 21: Canadian Cap Rates by Asset Class
below 3.0% due the belief that there remains additional National Average Cap Rate
runway for further rent increases, even despite rent control
7.0%
measures in the nation’s three largest provinces. The
downward trend in cap rates shows no signs of stopping
6.0% 6.39%
and should be further supported by an increase in access to
5.94%
cheap debt brought on by the recent shift to dovish stances 5.63%
5.40%
by central banks around the globe. Despite multifamily 5.0%
cap rates being the lowest in the country, the spread to
benchmark bond yields is above the 10-year average and 4.0% 4.41%
has not neared a point where it would be prohibitive for
investors due to incremental upside in multifamily yields. 3.0%
The recent landslide in global bond markets will only
intensify this dynamic further and should make investment 2.0%
in defensive multifamily real estate assets an enticing option
for private and institutional capital alike. 1.0%
With fundamentals looking well-supported by economic
and demographic tailwinds, a strong investment landscape 0.0%
and a sophisticated landlord community, the multifamily Multifamily Office - Industrial Retail Office -
Downtown Suburban
sector looks poised to maintain its standing as a sought-
after investment vehicle for years to come. Source: CBRE Research, Q2 2019.

Figure 22: Multifamily Cap Rate vs. 10-Yr Bond Yields

Yield (%)
10.0%
9.0%
8.0%
7.0%
6.0%
5.0% 153 bps
4.0%
3.0% 354 bps 322 bps
2.0%
1.0%
0.0%
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

10-yr GoC Bond Yield All Property Average Cap Rate Multifamily Average Cap Rate

Source: CBRE Research, August 2019.

Note: 1) 2019 cap rate as of Q2 2019

2) 2019 Government of Canada 10-yr Bond Yield as of August 2019.

CANADIAN MULTIFAMILY OVERVIEW MID-YEAR 2019 CBRE RESEARCH | 12

Click to download CBRE’s
Canadian Cap Rate and
Investment Insights Report

To learn more about CBRE Research, or to access additional

research reports, please visit the Global Research Gateway at
www.cbre.com/researchgateway.

C O N TA C T
Marc Meehan Thomas Biglands
Director, Canada Research Senior Research Analyst
+1 647 943 4205 +1 416 847 3241
Marc.Meehan@cbre.com Thomas.Biglands@cbre.com

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