Toronto’s Commercial Real Estate Update

The following are some of the ways to get in touch with each other Altus Group study found that, in the final quarter of 2023, the Greater Toronto Area (GTA) witnessed a total dollar volume of $22.8 billion in 2023’s final quarter, showing a drop of roughly 25% compared to the year before. Toronto is still one of the top 3 markets for investors despite the slight deceleration. Vancouver and Ottawa also lead the pack.

The industrial sector showed signs of stability with $7.6 billion dollars in dollar volume traded, a marginal rise year-over-year. Meanwhile, the hotel sector showed signs of recovery with $202 millions in dollar volume traded, a significant increase by 24% compared to last year.

On the other hand the retail sector experienced a decline. It reported $2.6 billion in dollar volumes transacted, which is an 8% reduction year-over-year.  

The office sector also experienced a significant decline. It recorded $3 billion in transactions – a 21% drop compared to last year. There was a significant increase in the Downtown office vacancy rates, which increased by 160 basis points, reaching 17.4%. This may have been exacerbated due to the addition of more space on the market. The construction of over 1.1 million square foot of new office space downtown Toronto in 2023 led to a net negative absorption rate of 2.7 millions square feet. The quality of the office space is also a significant factor in demand. Some predict that High-end officesFirst to rebound will be the earliest.

Recovery is expected

Experts expect more positive trends to continue in 2024. Private and institutional investorsThe commercial real estate market is still a place where people are buying and investing, so there could be a rise in transaction volumes in 2024.

The Bank of Canada (BoC), currently, maintains stable interest rates. However, some The following are some of the most recent analystsPredict a decline in rates by 2024. Increase in investment activityIn the second half of the year, this is especially true. A stabilization of interest rate is expected boost investor confidence, and stimulate more normal levels in deal-making. However, if inflation and economic growth differ from the Bank’s projections, any rate cuts may be delayed. 

One of the current proposals for commercial and mixed-use properties includes a for Bayview. A proposal for a mixed-use, transit-friendly development in Bayview Village was submitted to the City of Toronto. The project consists of two residential towers of 36- and 46-storeys with a common podium. This will provide 860 units for residential use and 4618 sqm of retail space. The development offers various unit types, with over 25% allocated to two- and three-bedroom units, in line with the City’s Growing Up Guidelines. The development will also include 2649 square metres in amenity space. This is split between indoors and outdoors, with the majority of it on a roof at Level 6. The first two floors will house a 4618-square-metre elementary school with offices, classrooms and a gym.