Commercial Real Estate Investment Sinks by 50% in the GTA

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The slowing economy and rapidly increasing interest rates saw the GTA's commercial real estate investment drop by a staggering 50% compared to Q1 of last year. altusgroup | realestate GTA commercialrealestate investment

“Investors and sellers both remain cautious and continue to struggle with price discovery,” the report reads.

Closing on commercial transactions also proved challenging in the first part of the year — Altus Group notes that investors were faced with having to renegotiate with lenders before the closing date. “To help get the deal over the finish line, purchasers had to bridge the gap with higher interest rates,” the report reads.

Out of all commercial real estate investment types, residential land was handily the most popular in Q1, securing $1.21B in total investment. It was followed by ICI land with just under $1B. Both of these represent “a significant drop,” Altus Group says, noting a 50% decrease in residential investment and a 38% decrease in ICI investment.

Industrial properties saw a substantial 50% drop compared to Q1 2022, with just $864M in total investment. Vacancy rates for industrial properties, however, remained incredibly low — at less than 2% — while rental rates continued to rise based on a limited supply of listings. Office investment transactions fell by $1.4B compared to 2022, to just $0.5B.

 

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