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Altus Group Limited has released its 2020 GTA Flash Report, which provides a comprehensive review of the real estate market in the Greater Toronto Area (GTA) based on 2019 Altus Group data. The report highlights the performance of investment property sales volumes, land markets, commercial leasing in the GTA.

“Investor appetite for commercial properties continues to be strong, resulting in a 7% increase in overall investment property sales in 2019. New home sales fared even better, rebounding by 47% overall as both end-users and investors showed renewed interest,” said Patricia Arsenault, Executive Vice President, Data Solutions at Altus Group. “2020 promises to be another solid year for new home sales and commercial property investment in the GTA, although uncertainty with respect to the global economy and geopolitical risk, combined with dampened homebuying intentions, could cut the recovery short.”

2019 GTA Commercial Real Estate Market Highlights

Boosted by strong activity in Q4, total investment property sales volumes in the GTA increased in 2019 to $22.6 billion, the second highest annual volume recorded since Altus Group started tracking the market in 2000.

The rental apartment sector was the star performer again in 2019, setting another record high for investment volumes with $3.8 billion in sales, up 40% over 2018. This was due in large part to Starlight Investments’ acquisition of a 44-property, $1.7 billion portfolio in December. The industrial sector also set another record high, up 31% year-over-year to $4.4 billion. The office sector hit its own new high at $4.1 billion, up 2% from the record set in 2018.

The residential land market, however, continued to see a decline in total investment sales in 2019, down by $716 million from 2018. The retail and hotel sectors also each saw a second consecutive year of declining investment, down 6% and 26% from 2018 respectively.

In the office market, only approximately 1 million sq. ft. of new office space was completed in the GTA in 2019. Strong office space demand in downtown Toronto, combined with minimal new supply delivered last year, pulled the overall vacancy rate down to the lowest level recorded in Altus Group’s tracking history. Nearly 10 million sq. ft. of new office supply is currently under construction in the downtown area alone. Despite the anticipated new supply, almost 75% of the space is already pre-leased, providing very little relief for tenants seeking new or expansion space.

The industrial market also continues to struggle with a low availability rate of just under 1.5%. Despite the approximately 8 million sq. ft. of new space completed in 2019, most of this new supply was leased before completion. The 14.7 million sq. ft. of industrial space currently under construction should help to somewhat ease the tight market conditions.

Overall year-over-year percentage change in relative performance by market activity in the GTA: