GTA commercial market remains a robust investor haven – Avison Young

The market is benefiting from greater confidence in its long-term prospects, Avison Young says

GTA commercial market remains a robust investor haven – Avison Young

Investors continued to pump capital into the Greater Toronto Area commercial real estate sector during the third quarter, according to Avison Young.

Increased confidence in the market’s long-term prospects, which have been enhanced by the sector’s robust performance despite pandemic-induced limitations, led to a new single-quarter transaction record of approximately $7 billion. This represented increases of 44% quarterly and 184% annually, Avison Young said.

Total year-to-date investment volume clocked in at $15.8 billion, up by 93% annually and exceeding the full-year results of every other previous year except GTA’s record annual total of $17.7 billion in 2019, Avison Young said.

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“The industrial, ICI land, and multi-residential sectors remained top-of-mind with investors,’ Avison Young said.

The industrial segment saw its investment volume increase by 79% quarterly to $2.5 billion. ICI land continues to benefit from the region’s ongoing development boom, with Q3 transactions amounting to nearly $1.5 billion (21% of the GTA total), Avison Young said.

Multi-residential investment volume totalled $1.3 billion during the third quarter, increasing by 65% from Q2 and by 133% from Q3 2020, Avison Young said.

“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,” Avison Young said.

Transaction volume across all asset classes saw another quarterly increase of 8%, while cap rates continued to be “compressed” by sustained investor demand during the third quarter, Avison Young said.

“The overall GTA-wide average [cap rate] declined 10 basis points to 4%, with decreases posted for all asset types except office, which remained stable at 4.4%,” Avison Young said.