Investor demand continues to outstrip available supply of product for sale in Greater Toronto Area

Avison Young releases its First Quarter 2017 Greater Toronto Area Commercial Real Estate Investment Review

TORONTO, May 2, 2017 /CNW/ - Following a record year of almost $12 billion in commercial real estate investment sales in 2016, the Greater Toronto Area (GTA) investment market recorded a 14% quarter-over-quarter decline in sales to $2.4 billion in the first quarter of 2017. This drop marked the region's third consecutive quarter of falling investment sales activity; however, the first-quarter dollar volume is 12% higher than the first-quarter 2016 level. Despite lower dollar volume, investor demand has not abated – and is hampered only by ongoing scarcity of product. While transaction activity is often slow in the first quarter of the year, investment activity in 2017 overall is expected to repeat the 2016 performance. 

These are some of the key trends noted in Avison Young's First Quarter 2017 Greater Toronto Area Commercial Real Estate Investment Review, released today. The quarterly report tracks GTA office, industrial, retail, ICI land and multi-residential property sales transactions greater than or equal to $1 million.

"The first-quarter performance is not indicative of a market starved of capital or the inability to raise capital, but the ongoing lack of available product to buy," comments Bill Argeropoulos, Principal and Practice Leader, Research (Canada) for Avison Young. "The second quarter is already off to a great start with more than $1.5 billion dollars' worth of commercial real estate deals, including four $100-million-plus transactions, inked in the month of April alone."

Avison Young Principal Nick Yanovski, based in Toronto, adds: "While dollar volume may be down, the number of transactions remains high. This situation reflects ongoing activity across all asset classes among private investors. We continue to see numerous competitive bids on properties – both large and small – offered for sale. In addition, there has been a noticeable increase in the number of off-market transactions, as both domestic and foreign buyers continue to chase desirable assets and seek to secure favourable financing rates."

Notable First-Quarter 2017 Investment Highlights:

  • GTA investment volume in the first quarter of 2017 came in at $2.4 billion, down 14% quarter-over-quarter, but up 12% year-over-year.

  • The industrial sector was the most active asset class by dollar volume in the opening quarter of the year with $746 million in sales (31% of the overall GTA total) – marking six straight quarters of rising sales.

  • Following a paltry $369 million in trades in the fourth quarter of 2016, office sales jumped 63% to close the first quarter of 2017 at almost $601 million – up 18% year-over-year.

  • Retail, the top performer in the fourth quarter of 2016, recorded a 57% drop in sales with just $445 million in trades during first-quarter 2017. Smaller deals were prominent – spanning streetfront, neighborhood shopping centres and freestanding properties.

  • ICI land sales were off to a slow start, falling 12% quarter-over-quarter to $363 million as more than 2,900 acres changed hands across the GTA.

  • Multi-residential was the least-traded asset class and perhaps the most impacted by the lack of available product, with a first-quarter sales tally of only $247 million.

Avison Young is the world's fastest-growing commercial real estate services firm. Headquartered in Toronto, Canada, Avison Young is a collaborative, global firm owned and operated by its principals. Founded in 1978, the company comprises 2,400 real estate professionals in 79 offices, providing value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial, multi-family and hospitality properties.

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Editors/Reporters
∙ Please click on link to view and download Avison Young's First Quarter 2017 Greater Toronto Area Commercial Real Estate Investment Review:
http://www.avisonyoung.com/fileDownloader.php?file=files/content-files/Research/Links/2017/GTAInvestmentReview(Q12017).pdf

SOURCE Avison Young Commercial Real Estate (BC)

For further information: Bill Argeropoulos, 416.673.4029, email: bill.argeropoulos@avisonyoung.com

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