Commercial real estate investment in the Greater Toronto Area (GTA) saw another strong quarter, continuing the high-performing streak that began in the second half of last year.
According to Avison Young's most recent Commercial Real Estate Investment Review, buyers' willingness to invest in capital during the second quarter of the year "is a testament to their confidence in the market's stability and prospects for the future amid the constantly shifting post-pandemic landscape."
Industrial trades led the pack with $2.6B in investment activity -- a full $1B more than was seen during the first quarter of the year and $1.2B more than the same time one year prior. This accounted for 36% of overall GTA commercial real estate investment volume. The GTA is well on track to obliterate pre-pandemic industrial investment volumes, with more than $4.1B in trades taking place in the first half of the year. In 2019, the full-year total was $4.3B.
Office and retail sales, on the other hand, were both down quarter over quarter. The report notes that during the previous quarter, office sales were boosted by the sale of Toronto's Royal Bank Plaza, which was picked up by Zara founder Amancio Ortega for $1.2B. On an annual basis, however, the $1.1B in office investment seen during the second quarter of the year is up substantially from the $349M seen during the same time in 2021.
"With almost $3B in assets changing hands through the first half of 2022, the sector has already eclipsed the annual results recorded in 2020 and 2021 -- and the all-time high of $4.3B set in 2019 may be within reach by year-end," the report says.
Retail was the only sector to fall short of $1B in trades during Q2, and was not only down quarter over quarter, but year over year as well with $696M worth of assets sold. This marks a 30% decline from Q1 investment.
"At this pace as of mid-year, the retail sector’s full- year investment total may fall short of the $3.6-B result achieved in 2021," the report reads. "Despite being the second-most active asset type by number of trades (trailing only the industrial sector), large deals were mostly absent this quarter, and the average transaction volume of $3.7M was the smallest among all asset types by a wide margin."
Industrial commercial investment land and multi-residential properties were both up slightly on a quarterly and annual basis. ICI land hopped up 5% from the previous quarter to $1.7B, bringing the yearly total to $3.3B which exceeds every full-year total prior to 2021's record-breaking $5.8B. Of note, the second quarter numbers were propped up by the $480M sale of 194 acres of agricultural land in Caledon to logistics operator Prologis.
Multi-residential sales grew 10% quarter over quarter to $1B, bringing the 2022 total to $1.9B. With that in mind, the report notes that the GTA is on track to meet or exceed the $3.8B investment high set in 2019. Portfolio sales accounted for 65% of the sector's total dollar volume during Q2, with four of the five largest transactions being portfolios.