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The BCREA Commercial Leading Indicator (CLI) increased 0.48 index points to 122.7 in the second quarter of 2016, in spite of a modest pull-back in economic activity throughout the third quarter. The CLI index is up 2.4 per cent compared to the third quarter of 2015. 

“Job growth in key commercial sectors and robust consumer demand led the CLI higher in the third quarter,” said BCREA Economist Brendon Ogmundson. “A rising CLI points to continued strength in BC commercial real estate activity in 2017.” 

Robust third quarter employment gains offset modest declines in the economic activity and financial components of the CLI. The underlying CLI trend, which smooths often noisy economic data, continues to push higher due to several quarters of strong economic statistics. That uptrend signals further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.

While strong growth in the economic activity component propelled the CLI higher through the first half of the year, a dip in key commerical economic activity indicators like wholesale trade and manufacturing sales were a drag on the index during the third quarter.

Following several months of mixed results, job growth turned positive across all key commercial real estate sectors. The CLI’s index of office employment increased by close to 10,000 jobs in the third quarter of the year, on the heels of a similarly large increase in the second quarter. Moreover, after posted declining job numbers since the beginning of 2016, the average level of employment in the manufacturing sector moved modestly higher in the third quarter.

The CLI’s financial component turned slightly  negative after a second quarter rally in Canadian REITs lost momentum. However, a further tightening  of short-term credit spreads signals that markets  were less concerned about underlying downside risk in the economy.

Q3 Highlights:

Growth in retail sales slowed marginally in the third quarter, but still posted year-overyear growth of nearly 6 per cent. Wholesale trade slowed from over 8 per cent growth in the second quarter to 5.4 per cent in the third. That growth offset a 1.6 per cent quarterly decline in BC manufacturing sales.

• Canadian REIT prices edged down by 1 per cent by the end of the third quarter following a 10 per cent increase in the previous quarter. Narrowing risk spreads were not quite enough to keep the CLI’s financial component positive for a second consecutive quarter. The financial component has now posted declines in five of the last six quarters.

• The CLI measure of office employment increased by close to 10,000 jobs for a second straight quarter while the manufacturing sector broke a string of two straight quarters of declining payrolls. Those employment trends accounted for all of the increase in the CLI in the third quarter.

Simon Fraser
Market Update

Simon Fraser Condos

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Novo I by Intergulf

Novo I built in 2007 known for the amazing sight lines and views from most units and balconies up to 1000 sq ft.

Novo II by Intergulf

Novo II built in 2007 known for the amazing sight lines and views from most units and balconies up to 1000 sq ft.

Aurora by Polygon

Aurora built in 2006 with 103 condos featuring 36 unique floor plans ranging from 715 sq ft to 1500 sq ft.

One University by Millennium

One University built in 2005 is UniverCity's flagship building with luxury homes featuring semi private elevators.

Harmony by Polygon

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Serenity Townhomes by Polygon

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The Hub by Liberty Homes

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Verdant by VanCity Enterprises

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Origin by Porte Development

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Nest by Mosaic

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Highland House by Liberty Homes

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Lift by Porte Development

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Altitude by Hungerford Group

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CentreBlock by Liberty Homes

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