A shortage of good buildings, not a shortage of funds, is holding the commercial real estate business back in Canada's major centres, according to a study by CB Richard Ellis Ltd.

In a report released Wednesday, CBRE said investment in commercial real estate fell 12 per cent to $6.8 billion in the first half of the year, mainly because developers couldn't find enough suitable properties to buy.

"Clearly, what kept investment down is a shortage of available prime real estate in many Canadian locations, not available funds or ambition to invest," said CBRE president Blake Hutcheson.

Hutcheson expects the industry to make up for the slow pace of the past six months with investments totalling $17 billion — close to the record set last year — by the end of 2006.

He said he was surprised that business is so slack this year because he has eager investors who are keen to get involved in the Canadian market.

"There is a tonne of domestic and foreign money available for investing in good commercial real estate," Hutcheson said, "but there just isn't enough desirable investment-grade product on the market to meet the demand."

CBRE found there were only 1,850 commercial transactions across Canada in the first half of the year, down 14 per cent from last year.

The industrial and retail sectors were the most active, with each segment showing investment of $1.8 billion. Office investments fell by a sharp 32 per cent to $1.8 billion.

Calgary was the fastest growing commercial market, up 24 per cent so far this year. Toronto was down by 20 per cent.