Business is booming in all areas of the Canadian real estate market, offering attractive opportunities to American investors.

The market has been experiencing a lot of growth over the past two years.

The first half of 2005 featured a double digit increase in total investments, surpassing $9 billion Canadian.

It's expected that by the year's end $17.4 billion total will have been invested in Canadian real estate.

This is up from $14.2 billion in 2004 and $11.3 billion in 2003. Also, the current vacancy rate is 3%, down from 11% in only two years.

"2005 featured positive economic growth, increasing absorption and decreasing vacancy rates," said Peter Senst, vice president and director at CB Richard Ellis, at a recent presentation entitled Opportunities in Canadian Real Estate.

On top of its recent strong economic performance, investing in the Canadian market is advantageous to Americans for several other reasons.

Canada's proximity to the United States is important, as well as the fact that they share the same time zones and speak the same language. Because of political stability, it's a safe place to invest and there are some price advantages compared to the United States.

"Canada looks cheap compared to New York," Senst said, "and you're seeing more and more activity."

The Greater Toronto area is an especially successful region in Canada.

It's ranked #7 in the North American office market and has the fourth largest industrial market in North America.

The office market especially is producing better quality, trading bigger assets and featuring more strategic selling. Vacancy rates are below 5%, making for a very tight market.

The Canadian industrial market is also a good one to watch. By the end of the year, 7.5 million s/f of new industrial space is expected.

"The industrial market involves U.S. capitals, fueled by GP pension funds," Senst said. "It's been a very dynamic market. Developers from the U.S. are accepting lower development returns.

"There's not a lot of growth in cap rates and the net yield is putting pricing pressure on rental rates." Retail is the more balanced of the markets. According to Senst, it's "in vogue in the Canadian market." The vacancy rate in the retail market is between 23%. There's almost no new supply plan, making another very tight market.

All of this means that 2006 should be another strong year for the real estate market in Canada, also making it ripe for investment from U.S. businesses.