TORONTO — GTA (Greater Toronto Area) commercial and new-home sales rebounded in 2019 according to a new report from Altus Group.
Altus’s 2020 GTA Flash Report reviews the performance of investment property sales volumes, land markets, commercial leasing and the new home sectors in the GTA in 2019.
“Investor appetite for commercial properties continues to be strong, resulting in a seven per cent increase in overall investment property sales in 2019. New home sales fared even better, rebounding by 47 per cent overall as both end users and investors showed renewed interest,” said Patricia Arsenault, executive vice-president for data solutions at Altus Group, in a Jan. 30 release. “2020 promises to be another solid year for new home sales and commercial property investment in the GTA, although uncertainty with respect to the global economy and geopolitical risk, combined with dampened homebuying intentions, could cut the recovery short.”
Total investment property sales volumes in the GTA increased in 2019 to $22.6 billion, the second highest annual volume recorded since Altus Group started tracking the market in 2000.
The rental apartment sector experienced a record high for investment volumes with $3.8 billion in sales, up 40 per cent over 2018. This was due in large part to Starlight Investments’ acquisition of a 44-property, $1.7-billion portfolio in December.
The industrial sector also set another record high, up 31 per cent year-over-year to $4.4 billion. The office sector hit its own new high at $4.1 billion, up two per cent from the record set in 2018.
The residential land market saw a decline in total investment sales in 2019, down by $716 million from 2018. The retail and hotel sectors also each saw a second consecutive year of declining investment, down six per cent and 26 per cent from 2018 respectively.
In the office market, approximately one million square feet of new office space was completed in the GTA in 2019. Strong office space demand in the downtown, combined with minimal new supply delivered last year, pulled the overall vacancy rate down to the lowest level recorded in Altus Group’s tracking history. Nearly 10 million square feet of new office supply is currently under construction in the downtown area alone. But almost 75 per cent of the space is already pre-leased, providing very little relief for tenants seeking new or expansion space, the release stated.
The industrial market also has a low availability rate of just under 1.5 per cent. Despite the approximately eight million square feet of new space completed in 2019, most of this new supply was leased before completion. There is 14.7 million square feet of industrial space currently under construction.
Aided by lower mortgage interest rates and the release of pent-up demand, total new home sales bounced back to just under 36,500 units, near the 10-year average.
New single-family home sales, with 9,523 detached, linked and semi-detached houses and townhouses (excluding stacked townhouses) sold, was 2.5 times the level of 2018.