Investment activity has continued to be inconsistent across asset classes, with Industrial and Multifamily sectors seeing the most cap rate compression and attracting the widest range of buyers. CBRE’s Canadian Cap Rates & Investment Insights has, for the first time in recent months, identified additional cap rate compression in service-oriented retail and suburban office properties. Crown’s experience confirms that the buyer pool for stable, mid-sized (<$50 million) office assets is deep, benefiting our funds as we continue our disposition program.
Leasing and Responsible Operations
Despite vacancy rates rising to 11.8% and 10.2% in Crown’s core markets of the GTA and Ottawa, respectively, these remain two of the tightest office markets in North America. Tenants continue to pay their rent (cash rent collections across Crown’s Fund Portfolio have stabilised at approximately 97%). Year to date, renewal leasing volume remains in line with Crown’s 2021 budgeting for our Fund Portfolio. Crown continues to actively engage with the leasing community. We also track leasing tours, an important indicator of the health of the leasing market and, ultimately the level of transactions. Our leasing team has noted that the size requirements for tours has increased compared with prior quarters, a great sign that larger tenants are advancing their plans to return to the office.
Crown continues to work to facilitate the return of building occupants, with an emphasis on community, health and wellness initiatives. As investors, tenants, and their stakeholders seek to increasingly align all aspects of their brands with socially and environmentally responsible practices, ESG disclosures and initiatives will continue to rise in importance. In anticipation, Crown has produced our First Annual ESG Report, publicly disclosing on performance measures. Crown has also submitted to GRESB on behalf of our Core Fund for the third consecutive year. We are proud that our submission achieved an overall score of 94 and that our team was awarded a 5-star rating.
As we approach the end of 2021, we are excited that the opportunity set for our fund will continue to expand in the current environment. We are deeply grateful to our growing pool of investors, many of whom have been with us since our first fund in 2006, who only weeks ago allowed us to close Crown Realty V LP, our largest value add fund to date with $260 million of commitments.