Towards a Methodology to Determine the Size of the Commercial Real Estate Market

In most developed countries, no current complete inventory of the size of the commercial real estate (in terms of sq ft or value) market exists. While the investment is real estate is large, it is not a category tracked by most governments, except possibly in terms of ìflowî through building permit data. The localized nature of the real estate market makes collection of data regarding the size of the market more difficult. This study discusses the difficulties involved in finding data rated to physical size and value of assets in various categories of commercial space in Canada (hotels, multi-residential, seniors housing, office, retail and industrial). It examines existing data tracked by commercial brokerage, consulting and other private sector companies and assesses the comparability of the data among different suppliers. It also examines the possibility of using market value assessment data as a proxy for value estimates for the size of the market and how these values compare to those derived from market data on average prices or rents per sq ft. The resulting numbers are also compared to the proxy estimate for value based on GDP developed by Liang and Gordon (2003) to assess the validity of their relatively simple method in this market.