The Greater Toronto Area is on pace for its fifth straight record year in both the number of commercial real estate transactions and the total dollar volume invested.

Scotia Plaza in Toronto is now wholly owned by KingSett Capital, which bought Dream Office REIT’s 50 per cent stake in August for $681 million. It is the largest CRE transaction in the GTA in 2017. (Image courtesy Dream Office REIT)

“At the end of Q3 2017, we have nearly matched the $17.1 billion invested in all of 2016,” said Altus Group data solutions manager Kenneth Lien.

The torrid pace continued into Q4, with several of the GTA’s 10 largest transactions coming in the past three months.

KingSett Capital made the two largest purchases of the year. 

The private equity real estate investment firm acquired the 50 per cent share of Scotia Plaza it didn’t already own from Dream Office REIT (D-UN-T) for $681.54 million in August. The acquisition of the 68-storey office tower at 40 King St. W. followed KingSett’s $433-million purchase of the 113,898-square-foot Ontario Hydro Building at 700 University Ave. from Ontario Power Generation in April.

Marriott International sold the four-star Sheraton Centre at 123 Queen St. W. to an arm of Brookfield Asset Management (BAM-A-T) for $335 million in October in the largest single hotel transaction in Canadian history — and the third-largest overall transaction in the region in 2017. 

Ed Mirvish Enterprises Limited sold 266, 276 and 284 King St. W. — the site of the future Mirvish+Gehry project — to Great Gulf for $300 million earlier this month. The proposed development will include 82- and 92-storey condominium towers and a multi-level podium.

Redevelopment sites are a driving force

“Given the housing market, redevelopment sites are a major driving force of the GTA real estate market,” said Lien.

A 111-acre future residential development site at 10348 Warden Ave. in Markham was sold by Wagema Nominee Limited to Sentinel Holdings Inc. and Metrus Properties for $296.21 million earlier this month.

“In 2016, we recorded nearly $4.9 billion worth of residential land transactions in the GTA,” said Lien. “We expect to greatly surpass that number this year, as we anticipate a value greater than $7 billion.”

Canada Lands Company sold the Dominion Public Building at 1 Front St. W. to Larco Investments for $275.1 million in March. The five-storey building beside Union Station was declared surplus by the federal government. It houses about 1,500 employees, including Canada Revenue Agency workers. Larco is owned by the Lalji family. Its portfolio includes retail, hotel, residential, office and industrial properties.

The Promenade shopping centre at 1 Promenade Circle in Thornhill was sold by Cadillac Fairview for $249 million in April to Promenade General Partner Inc., a business formed by the Serruya family and Liberty Development Corporation. The 900,000-square-foot mall on the 50-plus-acre site has more than 150 stores and services.

The 290-acre Country Club golf course property at 22 Lloyd St. N. in Woodbridge was sold by Toronto Region Board of Trade to Clubhouse Developments Inc. for $220 million in May. The developer plans to create a residential enclave with a significant amount of green space on the site along the Humber River.

British Columbia Investment Management Corporation sold the Delta Toronto Hotel at 75 Lower Simcoe St. to Hong Kong-based private investor group Leadon Investment Inc. for $215.76 million in February.

Yonge St. site sold to Asian investors

The 10th-largest transaction of 2017 was Aoyuan Property Group’s purchase of a property at 5799 to 5915 Yonge St. and 46 and 47 Averill Cr. from Silvercore Inc. for $200.8 million in September. The Chinese company will redevelop the site of an 11-storey office building and the Newtonbrook Plaza shopping centre for a mixed-use project. Demolition of the existing buildings, with the exception of a Food Basics store, is expected to start late in 2018.

While office, hotel, retail and residential land transactions were among the top 10, no industrial or apartment buildings made the cut. Lien, however, said they remain a significant and steady contributor to the GTA commercial real estate market.