Buyers and investors are registering strong confidence in the region's commercial assets
Investment in the Greater Toronto Area commercial real estate market remained elevated in the first quarter of 2022 after record-setting annual and quarterly results in Q4 2021, according to a new analysis by Avison Young.
“Buyers’ eagerness to deploy capital demonstrated their confidence in the market’s sound fundamentals and future potential,” Avison Young wrote in its Q1 commercial real estate review for the GTA.
Total sales of office, industrial, retail, multi-residential and ICI land assets valued at $1 million and higher amounted to $7 billion, which was 9% lower than the record-breaking final quarter of 2021, but 78% higher than Q1 2021.
“This result was also well above the 2021 quarterly average of $5.9 billion, potentially setting the stage for another record performance this year,” Avison Young said.
“In a first since the onset of the pandemic, the office sector recorded the highest transaction dollar volume ($1.9 billion) in the GTA, with ICI land and industrial assets (both at around $1.6 billion) not far behind.”
Read more: Commercial property demand sky-high: report
Cap rates also remained compressed and stable on a quarterly basis, averaging 4% across all asset classes throughout the GTA.
“The average cap rate for office assets ticked down 10 basis points (bps) during the quarter to 4.5%, while multi-residential assets still posted the lowest rates despite inching up 10 bps to 3.3%,” Avison Young said.
