Greater Toronto Area Commercial Real Estate

Investment Review

Third Quarter 2021

Investors continued to deploy a ready supply of capital into the Greater Toronto Area (GTA) commercial real estate sector during the third quarter of 2021, with stakeholders’ increasing confidence in the future demonstrated by record-breaking quarterly dollar volume, increasing transaction activity and declining cap rates.

The industrial, ICI land and multi-residential sectors remained top-of-mind with investors.

GTA Investment Activity by Sector and Dollar Volume

Average cap rate for all asset types GTA-wide – down 10 bps quarter-over-quarter and 30 bps year-over-year

$2.5B

Total industrial investment sales in the third quarter – accounting for 36% of total GTA investment

$15.8B

GTA-wide investment sales year-to-date – up 93% compared with the same period in 2020

GTA Investment Volume

GTA Select Capitalization Rates

Industrial

The already bustling industrial sector found another gear in the third quarter of 2021, as investment volume increased 79% quarter-over-quarter to $2.5 billion (representing 36% of the GTA total).

ICI Land

The GTA’s ongoing development boom continues to drive demand for ICI land from developers and investors. Dollar volume was down just 5% compared with the second-quarter result – which was an all-time quarterly high – as third-quarter transactions totaled nearly $1.5 billion (21% of GTA total).

$207.1M

Suburban assets accounted for the third quarter’s largest office transactions, led by the sale of Steeles Technology Campus for $338 psf

Image - Steeles Technology Campus

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Multi-Residential

Demand for housing remains strong across the GTA, and a limited supply of assets continues to make the multi-residential sector a highly sought-after asset type. Multi-residential investment volume totaled $1.3 billion during the third quarter (19% of the GTA total) – up 65% quarter-over-quarter and 133% compared with the third quarter of 2020.

Retail

Investment in the retail sector increased 33% quarter-over-quarter to $961 million – marking the fifth consecutive quarterly increase – for a year-to-date total of nearly $2.4 billion. Quarterly dollar volume was up 181% compared with the third quarter of 2020.

Office

The least-traded asset class for a seventh consecutive quarter, office investment made up just 10% of total GTA dollar volume but nevertheless rose 95% quarter-over-quarter and 192% year-over-year to $680 million as investors continue to assess their confidence in long-term tenant demand.

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