The Toronto Buttonville Municipal Airport, located just north of the city in Markham. (Google Street View)
The value of Greater Toronto Area (GTA) commercial real estate transactions hit a record $13.2 billion in the first half of 2021, an increase of 68 per cent over last year.
“Investors don’t see anything slowing us down,” said Ray Wong, vice-president of data operations for Altus Group‘s Data Solutions division, which crunched the numbers. “Inflation is there, but so far (it) hasn’t really impacted the economic recovery and hasn’t really had an impact on cap rates.
“Last year we saw cap rates go up for regional malls and office. Now we’re seeing more of a flatness and continued drops in cap rates for industrial and multifamily.”
Low interest rates and high demand from investors looking to place capital were key factors driving sales.
There were 1,417 transactions during the period, including 13 valued at more than $100 million. All asset classes experienced increased volume.
Altus Group is still finalizing its national transaction activity figures for the first half of the year, but Wong said they’re up significantly from last year across the country.
From the numbers it has so far, there were $31 billion in sales through the first six months, compared to $40 billion for all of 2020.
“We don’t see a slowdown in activity for this year,” Wong told RENX. “We know there are concerns with the possibility of a fourth wave and whether or not we’ll go into any type of a lockdown that would slow the economy down.
“The difference this time around compared to last year is that we know what we’re getting ourselves into. There were unknowns last year.”
Land remains king
Sales of residential land and lots, combined with industrial, commercial and investment (ICI) land, topped $6.7 billion and represented 51 per cent of total investments.
“It’s the residential land component that still remains the story and is garnering a lot of activity,” said Wong. “A lot of development is planned for two to four years out.”
With fewer disruptions and less uncertainty in the market than there was a year ago, development has picked up significantly. The number of development applications submitted to the City of Toronto hit 138 from January through June, up from 117 a year earlier.
Two-thirds of those 138 applications were for apartment condominium or purpose-built rental developments.
Industrial and apartments remain strong
As availability remains tight, industrial assets continue to be highly sought by investors. There were $2.9 billion in transactions in the asset class in the first half of 2021. Single- and multi-tenant properties, as well as industrial land, are all in demand.
Wong said new industrial buildings and warehouses with high ceilings are in demand by large users such as Amazon, while smaller buildings with lower clear heights in Etobicoke and Scarborough are also popular to meet e-commerce logistics needs and enable deliveries from areas close to consumers.
Wong said apartment transactions totalled approximately $1.8 billion in the first six months of the year.
“The challenge with apartments is that it’s so tight to buy product, which is pushing the need for purpose-built rental. Apartments have always had that consistent low cap rate and stable long-term returns.”
Retail and office
Retail transactions were also in the $1.8 billion range in the first half of 2021, according to Wong.
“Even though retail has had its challenges, it still has the locations. It can be used for retail in the short term and potential redevelopment down the road for some kind of multifamily use.”
The lone major asset class that didn’t crack the billion-dollar mark in total investments during the first six months of the year was office.
Considering the spread of the Delta variant and an increasing number of COVID-19 cases, the expected return to offices seems likely to be delayed and uncertainty will remain in the sector.
“Some office product is selling in urban areas for a low cap rate and isn’t based on existing needs, but potential redevelopment down the road in three to seven years,” said Wong.
“That’s a confidence boost for GTA commercial real estate because there is a medium- to long-term view of real estate to hold in the interim with any existing income, with thoughts to intensify the use and increase values down the road.”
Notable Q2 transactions
Tricon Residential plans to build two rental apartment towers on a Richmond Street East site in Toronto which it has acquired from ONE Properties. (Courtesy Tricon Residential)
A 417,000-square-foot multi-tenant industrial building at 501 Consumers Rd. in North York was acquired by Amazon for $56 million. The property sits on 10.4 acres of land in close proximity to Highways 401 and 404. The property was originally acquired by the vendor in April 2015 for $20.5 million and will likely be redeveloped by Amazon for a future fulfillment centre.
The property was one of three acquired by Amazon in the first half of 2021 for a total of $161 million. The other two were in Pickering and Etobicoke.
A 980,000-square-foot industrial building at 8000 Dixie Rd. in south Brampton sitting on approximately 58.8 acres of land was sold by current tenant Ford Motor Company of Canada for $195 million to Panattoni Development Company Canada, which will look to redevelop the site for future industrial uses.
Development applications for the site were submitted in 2011 which proposed 10 million square feet of mixed-use space for the site. The applications were appealed to the then-Ontario Municipal Board and subsequently withdrawn.
No new application had been submitted to the City of Markham at the time of the sale and it continues to operate as an airport.
A 2.14-acre residential land site with addresses on Queen Street East and Richmond Street East was acquired by Tricon Residential for $129 million from ONE Properties.
Development applications submitted to the City of Toronto propose two purpose-built rental apartment buildings with 824 units in 33- and 24-storey buildings as part of a mixed-use development.
Oxford Properties Group sold a fully occupied 321,000-square-foot industrial property at 8350 Lawson Rd. in Milton to GWL Realty Advisors for $90.6 million. Oxford had acquired the property in September 2008 for $27.6 million.
TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.
The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.
The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.
“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.
“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”
The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.
New listings last month totalled 15,328, up 4.3 per cent from a year earlier.
In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.
The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.
“I thought they’d be up for sure, but not necessarily that much,” said Forbes.
“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”
He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.
“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.
“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”
All property types saw more sales in October compared with a year ago throughout the GTA.
Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.
“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.
“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”
This report by The Canadian Press was first published Nov. 6, 2024.
HALIFAX – A village of tiny homes is set to open next month in a Halifax suburb, the latest project by the provincial government to address homelessness.
Located in Lower Sackville, N.S., the tiny home community will house up to 34 people when the first 26 units open Nov. 4.
Another 35 people are scheduled to move in when construction on another 29 units should be complete in December, under a partnership between the province, the Halifax Regional Municipality, United Way Halifax, The Shaw Group and Dexter Construction.
The province invested $9.4 million to build the village and will contribute $935,000 annually for operating costs.
Residents have been chosen from a list of people experiencing homelessness maintained by the Affordable Housing Association of Nova Scotia.
They will pay rent that is tied to their income for a unit that is fully furnished with a private bathroom, shower and a kitchen equipped with a cooktop, small fridge and microwave.
The Atlantic Community Shelters Society will also provide support to residents, ranging from counselling and mental health supports to employment and educational services.
This report by The Canadian Press was first published Oct. 24, 2024.
Housing affordability is a key issue in the provincial election campaign in British Columbia, particularly in major centres.
Here are some statistics about housing in B.C. from the Canada Mortgage and Housing Corporation’s 2024 Rental Market Report, issued in January, and the B.C. Real Estate Association’s August 2024 report.
Average residential home price in B.C.: $938,500
Average price in greater Vancouver (2024 year to date): $1,304,438
Average price in greater Victoria (2024 year to date): $979,103
Average price in the Okanagan (2024 year to date): $748,015
Average two-bedroom purpose-built rental in Vancouver: $2,181
Average two-bedroom purpose-built rental in Victoria: $1,839
Average two-bedroom purpose-built rental in Canada: $1,359
Rental vacancy rate in Vancouver: 0.9 per cent
How much more do new renters in Vancouver pay compared with renters who have occupied their home for at least a year: 27 per cent
This report by The Canadian Press was first published Oct. 17, 2024.
