Record Q1 for CRE investment in Greater Toronto Area

Greater Toronto Area (GTA) commercial real estate investment hit a record $6.07 billion in the first quarter, surpassing the previous Q1 record of $5.77 billion set in 2018.

Activity picked up in the latter half of 2020 after being put on hold for a few months after the onset of COVID-19 and its accompanying restrictions, and that momentum has continued through the first part of 2021.

“The reason why we see continued activity this year is that investors are implementing and carrying out their core and non-core asset repositioning, with acquisitions or dispositions,” Ray Wong, vice-president of data operations for Altus Group‘s Data Solutions division, told RENX about the information his group collected.

“People are a little bit more optimistic and sense that the economy is starting to move in the right direction.”

A bid-ask gap still exists between what sellers are looking for and what buyers are looking to pay, but Wong said it has narrowed a bit compared to 2020.

“Any time there’s uncertainty in the marketplace, that’s where you see delays, especially with the disposition of some assets. Vendors want the highest price possible if they’re not under pressure to sell.”

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Investment activity by asset class

Here’s how Q1 2021 compared to Q1 2020, before the pandemic made its biggest impact on the Canadian commercial real estate market:

– Residential land was up 72.1 per cent to $1.95 billion.

– Industrial was up 81.3 per cent to $1.43 billion.

– Industrial, commercial and investment land was up 74 per cent to $790 million.

– Retail was up 35.7 per cent to $685 million.

– Apartments were up 8.8 per cent to $642 million.

– Office was down 18.4 per cent to $348 million.

– Residential lots were up 70.5 per cent to $220 million.

Outlook for the rest of the year

As long as COVID-19 vaccines continue to roll out and the effects of the third wave of the COVID-19 pandemic don’t cause major disruptions, Wong expects more confidence and activity in the CRE market through the second and third quarters.