Market investment "made up for lost time" in 2021, Avison Young reports
Total commercial real estate investment in the Greater Toronto area amounted to nearly $23.5 billion in 2021, up by 92% year-over-year and exceeding the record-high annual total set in 2019 ($17.7 billion) by 33%, according to a new report from Avison Young.
“After being held back by uncertain circumstances in 2020, investors made up for lost time in 2021, taking advantage of free-flowing capital and low borrowing costs,” Avison Young said. “Against the backdrop of heated development and robust housing demand across the GTA, industrial, ICI land and multi-residential assets were the top priorities for buyers once again.”
Sales of office, industrial, retail, multi-residential, and ICI land assets valued at $1 million or higher totalled $7.7 billion in Q4, representing increases of 10% quarterly and 90% annually.
“Deal activity increased quarter-over-quarter, with nearly 700 transactions taking place across the GTA market. Distressed-asset sales remained in check through 2021, with a total of 26 transactions totalling $165 million – similar to 2020 levels,” Avison Young said.
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The cap rate across the GTA fell by 20 basis points (bps) over the course of the year to end 2021 at 4%. This continued a downward trend that has manifested on an annual basis since 2009, with the exception of a 10-bps increase in 2020.
“The decline in the overall average cap rate was led by the industrial sector, with single- and multi-tenant industrial assets compressing by 40 and 50 bps, respectively, to 3.8% and 4% at year-end,” Avison Young said. “Multi-residential assets posted the lowest cap rates of any sector, falling 40 bps year-over-year to an average of 3.2%.”
