Q1 2021 GTA Investment Market Overview

Colliers Talks

Roelof van Dijk and Jeremiah Shamess provide an investment market overview for Q1 2021, discussing factors impacting the market; sales volumes and pricing; how different asset classes are faring amidst the state of the market and economy; and anticipated effects of the upcoming inclusionary zoning policy change in the Greater Toronto Area.

The residential sector led the way in volume. Industrial and multifamily saw significant upticks and so did, surprisingly, retail. Roelof and Jeremiah tackle the question: “Why is 2021 so aggressive in terms of volume and velocity?”

Delving into the “big plays” transpiring in the market, Roelof and Jeremiah talk about the purchases private buyers are making, the driving factors behind these moves, as well as what’s next for this segment that accounts for “over 60% of transactions in the GTA on any given year”. Likewise, they discuss foreign investment into commercial real estate, 32.8% of which flows into the GTA. Why is this region so attractive to foreign investors? Will this trend continue?

A conversation on the investment market is not complete without the mention of yield (a major driver of commercial real estate investment in Canada), cap rates (“Most people are looking at the Toronto area's fairly low cap rates.”), risk in each asset class (“The age-old sentiment ‘location is everything’ continues to prove right.”) and interest rates (which “will remain at least relatively flat in the near future”).

Roelof and Jeremiah also cover the effect of immigration (or the lack thereof) on the GTA, and the market outlook once immigration resumes.

Juxtaposing the positive with the negative, the experts speak about distressed assets. With the vaccine rollout and businesses and consumers resuming activity, they expect to see the number of challenged properties decrease.

Roelof and Jeremiah round out their conversation with key takeaways for 2021, including what to watch for in the multifamily sector, how e-commerce will continue to drive demand in the industrial asset class, and the enduring need for office space.