Greater Toronto Area Commercial Real Estate
Fourth Quarter 2021
After being held back by uncertain circumstances in 2020, investors made up for lost time in 2021, taking advantage of free-flowing capital and low borrowing costs as they poured nearly $23.5 billion into Greater Toronto Area (GTA) commercial real estate assets during the year – up 92% year-over-year.
This exceeded the previous record-high annual total ($17.7 billion in 2019) by 33%. Against the backdrop of heated development and robust housing demand across the GTA, industrial, ICI land and multi-residential assets were the top priorities for buyers once again.
GTA Investment Activity by Sector and Dollar Volume
Average cap rate for all asset types GTA-wide – down 20 bps year-over-year
Total industrial investment sales in 2021 – accounting for 32% of total GTA investment
GTA-wide investment sales in 2021 - up 92% compared with 2020’s result
GTA Investment Volume
GTA Select Capitalization Rates
Coming off record-high sales volume in the third quarter, investment in the industrial sector backed off 11% quarter-over-quarter to a still-lofty $2.3 billion (representing 29% of the GTA total), for a full-year total of $7.6 billion.
Developers and investors alike continue to clamour for ICI land assets as the GTA’s development boom rolls on. Quarterly investment volume of $1.9 billion (25% of GTA total) was up 28% quarter-over-quarter and 214% compared with the fourth quarter of 2020.
After seven straight quarters as the least-traded asset class in the GTA, investment activity in the office sector rebounded in fourth-quarter 2021 to reach $1.4 billion (18% of GTA total) – up 106% quarter-over-quarter – for a full-year total of nearly $2.8 billion.
Investment volume in the retail sector increased for the sixth consecutive quarter to $1.2 billion (16% of GTA total), representing growth of 26% quarter-over-quarter and 119% compared with fourth-quarter 2020.
With unquenchable demand for housing in the GTA, activity in the multi-residential sector is restricted mainly by the limited supply of assets offered for sale. Sales volume totaled $896 million during fourth-quarter 2021 (12% of GTA total) – a decrease of 33% quarter-over-quarter but in line with the fourth-quarter result one year earlier.