Offices and apartments are bolstering GTA commercial investment

Offices and apartments were the major commercial asset investment drivers in the GTA during Q2 2019, according to Altus Group.

In its latest market report, Altus stated that total investment during the quarter was at $5.8 billion. Much of the strength came from the 563 sales transactions valued at over $1 million.

The Q2 figures represented the first increase after five straight quarters of declines, as well as the fourth highest quarterly investment total ever recorded for the region.

Offices and residential each accounted for around 20% of the total Q2 volume. The largest single commercial transaction during the quarter was in the office sector, with the $640-million sale of the Atrium on Bay in downtown Toronto.

“Pent up demand and low office vacancy rates (3.1% in downtown Toronto and 6.8% in the GTA for Q2 2019) have resulted in growing demand for office space in submarkets just outside the core,” Altus noted.

The apartment sector also enjoyed a 266% increase in investment from the previous quarter, and a 52% increase compared to Q2 2018.

Together, these heavy hitters are projected to fuel most of the market’s momentum through the remainder of 2019.

“Confidence in the GTA market remains high as investors continue to view the GTA as a stable and attractive market, which provides a strong potential for higher returns,” Altus explained.

Re-development sites were another major factor, representing almost 38% of all Q2 investment.

The industrial segment is at an exceedingly tight vacancy level of 0.8% in the GTA. The asset class had $944 million in Q2 investments, seeing a 22% quarter-over-quarter increase and 20% annual growth.

The retail sector, which was the most traded property type during Q2, enjoyed 25% year-over-year investment growth. “Investors continue to re-position and evolve their retail assets amid competitions with e-retailers by offering more on-site amenities and experiences.”

 

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