Just a few years ago, in April 2022, Jeremiah Shamess brokered a $90M sale of a high-rise development site in Toronto’s entertainment district. Shamess — who sells development land at Colliers, and also leads the Colliers Private Capital Investment Group — didn’t necessarily know it at the time, but that sale would mark something of a turning point for high-density land sales in the Greater Toronto Area.

“That was, I think, the final deal that got done before the market really kind of shut off,” Shamess tells STOREYS. “After that, the market slowed down significantly, and we saw that show up in the data in Q3 to Q4. We didn't know it was a trend until really two or three quarters after that.”

In a recent post on X, Shamess pointed out that development land sales for high-density sites — basically, anything zoned for six storeys or more — across the GTA have plummeted to a 10-year low. In fact, according to data from Colliers and Altus Group, there have been just 20 transactions as of the first quarter of 2024. “If we annualized the sales this year already we will be in the territory of 2009,” Shamess noted in his post.

The implication of that reality is that it essentially puts a wrench in the development pipeline. “When we stop the building process today, that creates a massive problem in the pipeline in five to seven years,” Shamess says. “When you look at the data, the pipeline of projects that was supposed to be finished and ready to go in 2026 and 2027, it effectively drops off a cliff. So that means that we're going to have, potentially, a massive deficit of product in 2026 and 2027. It’s not going to be good for the market.”

Taking a few steps back and looking at the ‘why’ behind the drop-off in land sales, Shamess points to “a capitulation in what vendors are willing to receive for their land.” He adds that most land in the region is held by syndicated non-bank lenders — private investors — who are effectively “holding the bottom of the market.” In cases of court-ordered sales, which quite clearly have spiked over the past six months or so, those lenders aren’t necessarily opting to sell.

“These non-bank lenders are looking at the land and thinking: ‘Well, we would rather own this land long-term, because we believe in the strength of the Toronto market, we believe that there's going to be continued immigration and need for housing. So we're going to act a little more like an investor rather than a lender and we're not going to lose our money, we're unwilling to lose our money,’” Shamess explains. “So that's why I think we've had this lull in the market.”

He also notes this “narrative” that’s unfolding in Canada is a far cry from what tends to happen in the US, where high-density land is held, primarily, by bank lenders. In cases of forced sales, those lenders are more likely to sell for “pennies on the dollar,” he says, essentially taking a loss and moving on.

Despite what Shamess is describing in the GTA, where non-bank lenders are holding onto development land rather than selling, he is still dealing with a surge in forced sales. In fact, he says that power of sales and receivership sales make up about 80% of sales he’s currently brokering through Colliers. “We've seen a massive increase: [they’re] up about 148% year over a year in the first quarter of this year,” he adds. “You know, we can't really speak to that number yet until we actually get a full year of transactions because typically, in the first quarter of the year, everyone's kind of rushing after sitting on their hands for December — but it's definitely been a massive increase.”

It’s not all doom and gloom, though. Shamess shares that certain parcels of land are moving organically — in fact, he says he recently closed on a site at Bayview and Sheppard — however, competitive pricing is critical these days. In addition, he’s firmly of the belief that things are poised to look up. This is the GTA after all, where real estate demand runs fairly strong no matter the season, and conditions don’t tend to stay downcast for long.

“The most positive thing I've seen happened lately is that there are actually still buyers out there buying land; it's not completely dead. And there [are] still lenders out there lending on sites. But everyone is way more careful, way more conservative,” he says.

“Another really positive thing that I think that is really good for our market is that when you look at the condo market where stuff is actually selling, you get hints of how the market might respond. For instance, Q Tower, which is being developed by Diamond and Lifetime, and it's being sold for roughly $1,750 per sq. ft, but the project won't finish until 2030. So buyers of those condos are looking at it as an option on the future. They're thinking: ‘Here's a great location in downtown Toronto… and in 2030, I think the Canadian market is going to be really great.’ So that is why that project is doing well.”

Shamess also points to Rise and Rose Condos, which is a project by Green Park coming to Richmond Hill. The first tower of that project recently sold out just a month after launch. “If buyers can continue to find product that is priced well, they will continue to buy,” he says. “So there’s actually still lots of demand, lots of buyers.”