The impact of rising interest rates for CRE in Canada

Altus Insights Podcast Series

Date: October 18, 2022

Name of podcast: Altus Insights Podcast Series

Episode title and number: Episode 12 – The impact of rising interest rates for CRE in Canada

Episode summary: Colin Johnston, President of Altus Group’s Research, Valuation and Advisory division, joins Marlon Bray and Raymond Wong to discuss discuss some of the key takeaways from a recent national survey of CRE leaders and professionals regarding the Bank of Canada’s interest rate hikes, what options are available to address this latest addition to the market’s challenges, and what predictions can be made about CRE in Canada for 2023.

Mentioned in this episode:

· Article: The impact of rising interest rates on CRE in Canada

· Survey findings: The impact of rising interest rates on CRE in Canada

Panelists in this episode:

· Colin Johnston is the President of Altus Group’s Research, Valuation and Advisory division in Canada, a group comprised of over 350 appraisers, economists, planners, advisors and data scientists. During his 25 plus years in the industry, Colin has become one of the country’s pre-eminent valuation and advisory professionals, with a particular emphasis on investment grade assets. Colin has spoken on numerous panels, written several papers on valuation, PropTech and served as an expert witness in arbitration cases. He is an active member of several industry associations, a designated member of the Appraisal Institute of Canada and a Fellow of the Royal Institute of Chartered Surveyors.

· Raymond Wong is the Vice President of Data Operations for Altus Group’s Data Solutions team. Overseeing 60+ researchers across Canada, Ray’s primary responsibility is to ensure data collection is all encompassing, reliable and accurate and that it adheres to the Altus Group data governance guidelines. Ray works closely with both internal and external clients to ensure the information meets their needs and that it is both accurate and timely. He also regularly presents on key market trends to clients and at industry events.

· Marlon Bray is the head of Altus Group's Ontario pre-construction and contract administration services as part of the Cost and Project Management team. With over 25 years of experience, specializing in budgeting, value optimization, and providing visibility on risk through the entire lifecycle from early due diligence through to completion. Marlon oversees a team that leads the way with cutting-edge estimating technology and data analytics, bringing a greater level of transparency, and added value to all projects he is involved with.

Key topics:

· 01:01 – Highlights of survey on the impact of rising interest rates for CRE in Canada

· 02:40 – The key takeaways and feedback from the national survey

· 07:32 – Do we have a bid/ask gap in the market?

· 10:59 – Which will be impacted more by interest rate hikes? New or existing developments?

· 12:21 – How much further can rent go up to justify development projects?

· 15:08 – Do the rising interest rates complete the perfect storm of challenges in the CRE market?

· 17:21 – Investing in core / core-plus vs. other assets, what makes more sense in this market?

· 19:50 – Predictions for 2023

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