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GTA CRE investment volume back on the rise in Q4

Avison Young capital markets principal Richard Chilcott. (Courtesy Avison Young)
Avison Young capital markets principal Richard Chilcott. (Courtesy Avison Young)

Total commercial real estate investment volume in the Greater Toronto Area was $4.6 billion in Q4 2023, up from $4.1 billion in the previous quarter and $3.8 billion a year earlier.

That was perhaps the most welcomed news found in Avison Young’s new Greater Toronto investment review Q4 2023 report.

“We have been progressing through a more stable marketplace as a result of a number of factors, most particularly the steady rise in Government of Canada bond yields since October 2021,” Avison Young capital markets principal Richard Chilcott told RENX in an email interview. 

“October 2023 saw the highest yields for many years and a drop in yield, together with a more stable outlook, has given investors a foundation upon which to price and deploy capital.”

Full-year sales volume of $20.4 billion was down eight per cent year-over-year, but still higher than any past year except the record-setting 2021 and 2022.


There were 161 industrial transactions in the fourth quarter, accounting for 36 per cent of total transactions.

The $2.3 billion in sales during the quarter pushed total 2023 industrial real estate investment volume to a new high of $10.4 billion, smashing the previous record of $7.6 billion set in 2021.

Record-high investment activity for the industrial sector demonstrates these assets’ ongoing appeal while buyers adapt to a slight increase in availability and slower rental rate growth in what remains a tight leasing market. 

The biggest Q4 industrial transaction was Oxford Properties’ $990-million sale of a 75 per cent share in its Brampton Business Park and Vaughan Industrial Park properties to San Francisco-based global alternative asset management firm TPG.


There were $1.1 billion in retail transactions in the fourth quarter. 

The largest was LaSalle Investment Management acquiring a 49 per cent share in Vaughan Mills shopping centre from Ivanhoé Cambridge for $470.16 million as part of a syndication process.

While the number of retail properties that changed hands in the GTA in the fourth quarter and for the entire year was second only to industrial, the supply of desirable necessity-based retail assets is still less than the demand as many owners are holding onto these properties.

“Industrial and retail assets continue to be in high demand from a broad investor community,” Chilcott observed. 

“Pent-up demand with a clarity as to future performance allowed for a narrowing of the bid-ask spread and transactions naturally followed.

"The other asset classes are taking longer to establish broad demand while the vendor community remains unwilling to accept perceived opportunistic pricing.” 

Industrial, commercial and investment land

There were $598 million in industrial, commercial and investment (ICI) land transactions in the fourth quarter.

The biggest fourth-quarter transaction was Times Group’s acquisition of approximately 80 acres at 3143 Nineteenth Ave. in Markham for $68 million.

The 2023 total of 6,803 acres of ICI land sold was down 46 per cent year-over-year while the number of transactions decreased by 55 per cent to 271. 

The appeal of ICI land has waned as potential developers find themselves in an environment with higher interest rates and holding costs, rising construction costs and less certainty around returns on their investment.

This returned activity to more normal levels compared with the exceptional volumes of the previous two years.


There were $299 million in office transactions in the fourth quarter.

No major downtown Toronto office assets changed hands in the quarter, resulting in the low sales volume.

The largest transaction of the quarter was a $26.15-million acquisition of an office property at 1295 N. Service Rd. in Burlington by a numbered company registered in Ontario.

Total office transaction volume was $3.1 billion in 2023, down 19 per cent year-over-year despite receiving a big boost from Allied Properties REIT’s third-quarter sale of its data centre portfolio for $1.35 billion to Japanese telecommunications firm KDDI Corporation.


There were $230 million in multiresidential transactions in the fourth quarter.

While investment activity in the sector was up nine per cent quarter-over-quarter, the full-year total of $1.3 billion was down 53 per cent year-over-year and the lowest annual total since 2016. 

Uncertainty around the potential for rising interest rates earlier in 2023 resulted in a significant reduction in investment volume as buyers’ deferred decision-making pushed many deal closings beyond the end of the year.

The biggest transaction of the quarter was District Property Trust’s $69.8-million acquisition of an apartment building portfolio.

Increasing optimism for more transactions

“We expect all asset classes to offer more assets both on- and off-market,” Chilcott said as he looked ahead to 2024.

“Private and institutional capital is engaging with the marketplace and we expect a pickup in volume for all asset classes through the year.”

A stabilization in interest rates is expected to lead to greater investor confidence in structuring transactions and a resumption of more normalized deal volumes.

“The market has adjusted more quickly and has shown more resilience than many commentators have noted,” Chilcott said.

“The willingness of buyers and sellers to come to terms so quickly is a testament to the availability and flexibility of capital in the Canadian real estate sector. 

“Some challenges continue to be worked through, but perhaps we have already returned to a more normalized marketplace with trailing asset classes finding their equilibrium and pricing throughout the year to come.” 

CORRECTION: This article was updated to correct erroneous information about the purchaser of the Burlington office property, which had been supplied to RENX. We apologize for the error.

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