This property type continues to buoy the region's commercial property market
Amid weaker activity levels in the Greater Toronto Area commercial real estate market in Q3 2022 following a strong first half, retail stood out as the region’s most robust asset class, according to Avison Young.
This was especially apparent on a quarterly basis, with total investment of $694 million accounting for 15% of the GTA commercial market’s total for Q3, and essentially remaining stable from Q2.
“However, volume was down 28% compared with the third quarter of 2021,” Avison Young said. “With $2.4 billion in year-to-date sales, the sector is unlikely to match last year’s $3.6 billion total before the year is out.”
Still, stronger spending in the region (particularly for essentials) and a healthy mix of tenants will continue to bolster GTA retail’s prospects.
“Strength in this sector is largely coming from private buyers, while some lenders are more open to considering retail assets, viewing them as having less uncertainty than others, such as office,” Avison Young said.
These factors are helping buoy the asset class from elevated interest rates and ongoing economic uncertainty, which Avison Young pointed to as the main drivers of the Q3 weakness in the overall commercial market.
“Many of the transactions that closed during the third quarter were negotiated in earlier months, and the market is expected to undergo a period of adjustment as stakeholders seek a new equilibrium in the current economic landscape,” Avison Young said.
