Toronto multi-residential segment in the doldrums

The power of the multi-residential asset class has waned in Toronto, ending up as the least traded commercial property type during the first quarter of the year, according to Avison Young’s latest Commercial Real Estate Investment Review: Greater Toronto Area study.

Avison Young cited extreme scarcity, rather than thinning interest among investors, as the main driver of the trend.

GTA’s multi-residential property had $236 million in sales during Q1 2019 (with a 9% market share), considerably lower than the $288 million seen during the same time last year.

“The top transaction was the $30-million sale of 15 Walmer Rd. in Toronto’s Annex neighbourhood, representing nearly $385,000 per unit and a cap rate of 2.2%,” the report noted.

“Starlight Investments, among the sector’s most active players in 2018, also made the top five with its purchase of a 79-unit Mississauga townhouse complex for almost $27 million.”

A significant drop was observed from Q4 2018 (activity representing a total of $602 million), which itself already suffered an even more massive decline from Q3 2018 (activity reaching a peak of $1.2 billion).

GTA’s overall commercial sales – covering industrial, retail, office, multi-residential, and ICI properties – fell by 18% quarter-over-quarter to end up at $2.7 billion. Q1 2019 was the second consecutive quarter that saw no commercial asset class getting more than $1 billion in transactions.

Overall commercial investment for 2018 was a record-high $15.6 billion.

 

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