Corona Virus & Canadian Warehousing Logistics
What does Corona Virus have to do with Canadian #Warehousing Logistics?
The coronavirus has put a blip on the Canadian economy, reducing the chances of an interesting rate hike.
Industrial real estate capitalization rates are driven by the interest rates lenders are willing to lend at.
When interest rates are lower then industrial prices generally go up because investors or users are able to leverage more funds to purchase property and see better leveraged returns, similar to the housing market.
As rates go high the reverse generally happens in that prices decrease.
The industrial lease rates in key markets of a Canada have increased rapidly over the past few years. Leaving less room for further rapid increases in the near future. Rents 3 years ago that were $7 in Vancouver are now $12, over the next 3 years predictions are rents are to continue to increase, but not at such a rapid rate.
As long as rates are at current market value, warehousing storage rates shouldn’t see an out of the ordinary increase in the near future as the bank of Canada is likely not to increase nor decrease interest rates.