While we largely focus on Residential Real Estate, we do also watch the trends in Commercial Real Estate and this latest report, on the Commercial Leading Indicator,gives some useful insights into the current state of the BC Economy and the things that are likely to affect Real Estate as a whole in the coming months.
Vancouver, BC – September 2, 2015.
The BC Real Estate Association (BCREA) Commercial Leading Indicator (CLI) declined in the second quarter by 0.4 points to 120.6, the first decline in the index since the beginning of 2014. However, due to strong gains over the past four quarters, the trend underlying the CLI continues to push higher.
“Uncertainty in the global economy roiled financial and commodity markets in the second quarter,” said BCREA Economist Brendon Ogmundson. “However, BC’s nation leading economic growth should help to sustain commercial real estate activity through the end of the year.”
The CLI trend smooths the often noisy economic data that comprises the CLI index and is therefore a more reliable indicator of future growth in investment, leasing and other commercial real estate activity. Therefore, the continued rising trend in the CLI still points to positive growth, despite this quarter’s slight downturn in the index.
• While some sectors and provinces in Canada appear to be mired in recession, the outlook for the BC economy is the brightest it’s been in years. That said, lower energy prices and slow growth in key export markets had a clear effect on BC in the second quarter. Wholesale trade fell 1.5 per cent and manufacturing sales fell 2.1 per cent. Conversely, demand in the domestic side of the economy was very strong as signalled by a 2.1 per cent quarterly gain in retail sales.
• Low energy prices and economic uncertainty in China rippled through Canadian financial markets. The benchmark index for Canadian REITs fell 2.5 per cent on a quarterly basis after posting an impressive gain to start the year.
• Employment growth in BC has picked up in recent months but still remains low at just 0.5 per cent through June. Results continue to be mixed for employment growth in sectors that tend to lead commercial real estate activity. Average office employment fell by 3,500 jobs from the first quarter to the second quarter of 2015, while average manufacturing employment increased for the second consecutive quarter, rising by 5,700 jobs.
To read the full report go to – http://www.bcrea.bc.ca/docs/economics-forecasts-and-presentations/clireport.pdf?sfvrsn=12
Trish and Tanis
Tel 250 863 8989