Greater Toronto Area Commercial Real Estate
Second Quarter 2022
The Greater Toronto Area (GTA) commercial real estate investment market repeated its strong first-quarter performance in the second quarter of 2022, continuing the momentum reported in the second half of the previous year.
The willingness of buyers to invest capital is a testament to their confidence in the market’s stability and prospects for the future amid the constantly shifting post-pandemic economic landscape. The industrial sector returned to top position with the highest investment dollar volume during the quarter and led all asset classes by year-to-date total for the first half of 2022.
GTA Investment Activity by Sector and Dollar Volume
Average cap rate for all asset types GTA-wide – up 10 bps quarter-over-quarter
Total acreage of first-half GTA ICI land sales (more than 99% outside the City of Toronto)
GTA-wide industrial asset sales – 33% of the quarter’s total number of transactions
GTA Investment Volume
GTA Select Capitalization Rates
After a slower first quarter by recent standards, investment dollar volume for industrial assets across the GTA rebounded 63% quarter-over-quarter to nearly $2.6 billion – representing 37% of overall GTA investment volume during the quarter and an increase of 81% compared with second-quarter 2021.
Driven by ongoing strong demand from developers and investors in the context of the GTA’s construction boom, interest in ICI land assets remains elevated.
Following an impressive first-quarter result boosted by the sale of Toronto’s Royal Bank Plaza, investment in the office sector declined 44% quarter-over-quarter to $1.1 billion (15% of GTA total) – still representing an increase of 207% compared with the lacklustre result posted one year earlier.
Always sought by investors keen to own a piece of the GTA’s tight housing market, multi-residential assets posted $1 billion in trades during the second quarter (14% of GTA total) – up 10% quarter-over-quarter and 23% compared with the same quarter last year.
The only sector to fall short of $1 billion in second-quarter trades was retail, as $696 million worth of assets changed hands (10% of GTA total) – down 30% quarter-over-quarter and 4% compared with second-quarter 2021.