REITs are backing off, but private investors more than picked up the slack as demand for commercial real estate in B.C. reached near record levels in the first half of 2013, according to Avison Young's Mid-Year 2013 BC Real Estate Investment Review. There were 58 transactions totaling more than $724M--the second highest number of transactions reported in a six-month period since 2002.

Potential interest rate increases led several REITs to back off raising capital to fund purchases. "Remaining purchasers continue to be aggressive in pricing," says AY principal Michael Gill (right, snapped with AY principal Bob Levine). There is high demand for commercial real estate in all asset classes yet the supply remains limited, according to the report.

The retail and industrial segments were strong, adds AY principal and managing director of the Vancouver office Michael Keenan. Demand for office assets remained particularly strong. However, there were just 10 transactions ($165M) because of the shortage in supply. The sale of Discovery Parks Vancouver ($66M) was the largest office deal (two pics above). There were 24 trades totaling $292M on the retail side, with 24 deals booked at $268M in the industrial sector.