Commercial property value in Canada’s third largest city has been weakened this year by a cannabis industry boost that never materialized, according to RE/MAX.
The international real estate company links the province’s “lacklustre cannabis market” to the slumping value of Greater Vancouver’s commercial market.
“Despite the expectations of cannabis carrying the commercial market in the West to new highs in 2019, the sector has fallen short, especially the limited retail roll out in British Columbia,” RE/MAX said in a recent report.
“As a result, regions like Greater Vancouver, poised to become a cannabis hot spot in 2019, has experienced a year-over-year decrease.”
RE/MAX found the total dollar value of all commercial property types declined 69 per cent year-over-year. Elton Ash, regional executive vice president for Western Canada, cited “a variety of factors including overall supply, stigmas, approval times and licensing restrictions” related to cannabis for impeding commercial property growth.
British Columbia had just 57 cannabis stores open for business in July, compared to 176 in neighbouring Alberta, according to data from Statistics Canada released on Wednesday.
RE/MAX said retail landlords have found it difficult to get traditional commercial financing due to reluctance among banks.
Ash expects modest growth for the region’s commercial property market in 2020, with weak oil prices and global trade disputes representing ongoing risks.
“Despite the pressures, we're starting to see the market steady and 2020 looks more promising,” he said.
Ontario-based real estate company Morguard included Vancouver among the Canadian cities where it sees strong real estate investment. However, it cites Montreal and Ottawa as locations where the cannabis industry is expanding its footprint.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.