TORONTO — Avison Young’s Greater Toronto Area Commercial Real Estate Investment Review, released recently, found in the second quarter of 2022, the Greater Toronto Area (GTA) commercial real estate investment market repeated its strong first-quarter performance.
“The willingness of buyers to invest capital is a testament to their confidence in the market’s stability and prospects for the future amid the constantly shifting post-pandemic economic landscape,” states the report. “The industrial sector returned to top position with the highest investment dollar volume during the quarter and led all asset classes by year-to-date total for the first half of 2022.”
The review indicates a 4.1 per cent average cap rate for all asset types GTA-wide – up 10 bps quarter-over-quarter; 8,162 of total acreage of first-half GTA ICI land sales (more than 99 per cent outside the city of Toronto); and 221 GTA-wide industrial asset sales, 33 per cent of the quarter’s total number of transactions.
For industrial, the review found after a slower first quarter by recent standards, investment dollar volume for industrial assets across the GTA rebounded 63 per cent quarter-over-quarter to nearly $2.6 billion, representing 37 per cent of overall GTA investment volume during the quarter and an increase of 81 per cent compared with second-quarter 2021.
Interest in ICI land assets remains elevated driven by strong demand from developers and investors in the context of the GTA’s construction boom, the report states.
Following a strong first-quarter result boosted by the sale of Toronto’s Royal Bank Plaza, investment in the office sector declined 44 per cent quarter-over-quarter to $1.1 billion (15 per cent of GTA total) – still representing an increase of 207 per cent compared with the result posted one year earlier.
Multi-residential assets posted $1 billion in trades during the second quarter (14 per cent of GTA total), up 10 per cent quarter-over-quarter and 23 per cent compared with the same quarter last year.
The only sector to fall short of $1 billion in second-quarter trades was retail, as $696 million worth of assets changed hands (10 per cent of GTA total) – down 30 per cent quarter-over-quarter and four per cent compared with second-quarter 2021.
The full report can be found at GTA_Investment_Review-Q2_2022.pdf (avisonyoung.ca)