With rent rates continuously on the rise, buyers in the Greater Toronto Area are snapping up apartment buildings in record-breaking numbers.
This is according to Avison Young Canada’s 2018 third quarter report which recently reported the rise in multi-residential apartment buildings sales in this block of 2018.
The report states that the demand for commercial real estate continues to outpace the supply, as investors seek to take advantage of record-low vacancy rates as well as the increasing rental rates across the board. As properties in the big city continue to increase in value and rising interest rates continues to be a very real prospect, more commercial real estate buyers bought properties in their name.
“Buyers invested a whopping $4 billion in GTA properties. Most shocking is that multi-residential apartment buildings accounted for $1.2 billion, a number that not only is a record high, but is also double that of the last quarter.”
As a result, these buyers invested a whopping $4 billion in GTA properties. Most shocking is that multi-residential apartment buildings accounted for $1.2 billion, a number that not only is a record high, but is also double that of the last quarter.
This market activity was the result of a major portfolio trade of more than 3,100 units which The Wynn Group sold to two different buyers: Timbercreek Asset Management and Starlight Investments. Each of these companies bought nine buildings for a combined total of more than $814 million.
Commercial real estate sales totalled $919 million during the third quarter, a significant increase over $780 and $787 million from this year’s first and second quarter respectively. However, on a year-over-year basis, sales were down by 6%.
As for office sales, those were up by 25% compared to the second quarter. Given record-low vacancies, ever increasing rents and a general lack of sizable office buildings for sale, investors remained focused on suburban areas. KingSett Capital, for example, sold to office buildings near the airport to Greater Toronto Airports Authority for $143 million.
Retail investors continued to be selective and cautious in regards of their acquisitions because they are facing the unique reality of more and more retail stores being web based rather than physical. Retail sales registered a total of $572 million, which is a 6% increase in a quarter-over-quarter basis, but a 7% decrease in a year-over-year basis.
ICI land transactions slowed down significantly from 1.3 billion in sales in the second quarter to $448 in the third quarter which is in-line with historical norms. At almost $2.8 billion so far this year, ICI transactions have already surpassed last years performance of $2.2 billion.