Greater Toronto Area Commercial Real Estate

Investment Review

Second Quarter 2021

Low borrowing costs and abundant cash continued to fuel investors’ appetite for commercial real estate assets in the Greater Toronto Area (GTA) during the second quarter of 2021, as ongoing vaccinations allowed Ontario to begin ‘Step Three’ of its reopening plan, giving stakeholders greater confidence in the future.

Decade-low availability of industrial space and robust occupier demand made buyers’ hunger for ICI land and industrial assets especially insatiable – both sectors have the potential to exceed annual volume records by year-end.

GTA Investment Activity by Sector and Dollar Volume

4.1%

Average cap rate for all asset types GTA-wide – down 10 bps quarter-over-quarter, but unchanged year-over-year

$1.4B

Total industrial investment sales in the second quarter – accounting for 29% of total GTA investment

95%

Increase in ICI land dollar volume quarter-over-quarter, to $1.6 billion

GTA Investment Volume

GTA Select Capitalization Rates

ICI Land

Relentlessly pursued by investors for development or as a safe asset class, ICI land sales increased 95% quarter-over-quarter and a whopping 342% year-over-year to nearly $1.6 billion in the second quarter of 2021 (representing 32% of the GTA total).

Industrial

The industrial sector remains red-hot with $1.4 billion worth of properties changing hands for the second consecutive quarter (29% share), for a year-to-date tally of $2.8 billion – implying the sector may be on pace to exceed 2020’s record-setting full-year total of $4.6 billion.

$90.6M

The industrial sector’s largest deal of the second quarter was the sale of 8350 Lawson Rd., a 321,000-sf facility in Milton, for $282 per square foot

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Multi-Residential

Investors remain drawn to multi-residential assets despite the relative scarcity of assets available on the market. Multi-residential transaction volume totaled $815 million in the second quarter (17% share) – up 27% quarter-over-quarter and 163% compared with the second quarter of 2020.

Retail

Investment in the retail sector increased for the fourth consecutive quarter, rising 5% quarter-over-quarter and 125% year-over-year to $725 million (15% share) in the second quarter. Year-to-date investment volume of $1.4 billion represents 81% of 2020’s full-year total – a promising sign for this asset class.

Office

Office was the least-traded asset class for the sixth consecutive quarter as investors continue to await some clarity with respect to future occupier demand in the sector. Availability and vacancy rates continued to rise during the second quarter, while investor caution largely directed capital to other asset types.

For more market information

Contact our team

Steven Preston Research Manager, Downtown Toronto steven.preston@avisonyoung.com +1 416.673.4010

Warren D'Souza Research Manager, Suburban Markets warren.dsouza@avisonyoung.com +1 905.283.2331