Greater Toronto Area investment market bounces back strongly in 2010 as buyers and sellers converge on pricing

Avison Young releases Winter 2010-2011 Greater Toronto Area Investment Review

TORONTO, Feb. 16 /CNW/ - The commercial real estate investment market in the Greater Toronto Area (GTA) bounced back strongly in 2010 with some sectors of the market at, or close to returning to levels not seen since 2007. After two years of sitting on the sidelines, buyers and sellers finally came together as they transacted nearly $7.4 billion worth of commercial real estate - $3.2 billion more than one year ago. The retail sector had a record year, reversing four straight years of declining sales.

These are some of the key trends noted in Avison Young's Winter 2010-2011 Investment Review- Greater Toronto Area, released today. The semi-annual report tracks GTA office, industrial, retail, land and multi-residential property sales transactions greater than $1 million.

"Continuing the good performance seen in the first half of the year, the last six months of 2010 provided strong year-end results for the GTA commercial real estate investment market," comments Bill Argeropoulos, Vice-President and Director of Research (Canada) for Avison Young. "If the first two months of this year are any indication, with more than $1 billion in trades either underway or completed, we are in for a similar if not better performance in 2011."

According to the report, overall investment sales volume across the GTA reached nearly $7.4 billion in 2010 - a 78% leap over the $4.1 billion that sold in 2009 and slightly more than the $7.1 billion sold in 2008. Retail had a record year in 2010 with total sales of $2.1 billion, a 249% jump over 2009. Office ($1.70 billion, up 72%), edged out industrial ($1.66 billion, up 50%). Land sales followed, rising 16% over 2009 with $1.1 billion, while multi-residential was the only sector to not break the $1-billion mark, finishing the year at $812 million.

"The market remains very competitive with multiple offers across all property types," adds Robin White, Avison Young's Executive Vice-President, Capital Markets Group. "Trophy assets are highly contested and are clearly reflected in the compressed cap rates. While cap rates for these prime assets may have already reached previous lows, cap rate compression will continue for secondary-level assets." 

Sector Investment Review Highlights:

Office property transactions amounted to $710 million in the second half of the year, down from a strong first half which saw $992 million in sales - a drop of $282 million or 28%. Despite lower investment volumes, 2010 was a breakout year for the office sector with total sales reaching just over $1.7 billion. Downtown core office trades remained scarce. In 2010, seven office buildings sold for a total value of $456 million. This number of transactions is up from five in 2009, but down from 13 and 14 in 2007 and 2006, respectively.

Even though sales volume was off between the second and first halves of the year, overall sales activity for 2010 was 16% higher than in 2009, finishing the year at $1.1 billion - the first annual increase in three years. Land's market share of the total dollar volume declined to 14% in the second half from 17% in the first half.

The retail sector was by far the best-performing asset class in 2010, reversing four years of falling sales. A record first half which saw $1.1 billion (30% market share) in retail trades was followed by another $1.0 billion (27% market share) in the second half - the first back-to-back billion-dollar sessions for this asset class. When the final tally was completed, a record $2.1 billion was transacted in 2010 - an exceptional 249%, or $1.5 billion, advance over 2009.

The continued lack of available product has kept the multi-residential sector largely at bay. Sales of multi-residential properties, however, grew a modest 15% to $435 million in the last six months of 2010, up from $377 million in the first six months. Despite failing to break the $1-billion mark for the sixth straight year, the year-end total of $812 million (11% market share) represented a 69% increase over 2009 - reversing two years of declining sale volumes.

The sale of industrial product ramped up in the second half of 2010, outpacing retail for the highest sales volume and recording the most notable improvement over the previous six-month period. In total, $1.7 billion (22% market share) worth of industrial buildings changed hands in 2010 - a jump of $550 million, or 50%, from one year ago.

Founded in 1978, Avison Young is Canada's largest independently-owned commercial real estate services company and the only national, Canadian-owned, principal-managed real estate brokerage firm in the country. Headquartered in Toronto, Ontario and ranked among Canada's leading national commercial real estate organizations, Avison Young is a full-service commercial real estate company comprising more than 700 real estate professionals in 23 offices across Canada and in the U.S. The company provides value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-residential properties.

∙ Please click here to view Avison Young's Winter 2010-2011 Investment Review-Greater Toronto Area:

SOURCE Avison Young (Canada) Inc.

For further information:

For further information/comment:

  • Bill Argeropoulos, Vice-President & Director of Research (Canada): (416) 673-4029
  • Robin White, Broker & Executive Vice-President, Capital Markets Group: (416) 673-4009

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