The great metropolitan area, Great Toronto Area, has become an endless war chest of capital with too little commercial inventory for the downpour of the property purchasers. The demand of everything from apartment buildings to retail storefronts and industrial buildings in Toronto is soaring high among the investors, but the sales in all those sectors remains depressed.
“In some areas of the country, we’re seeing unsolicited offers on product not available for sale — often well above market value”, according to the commercial property Toronto key trends noted in the annual ReMax Commercial Report. “There’s a lot of money chasing a limited supply of commercial product”.
Toronto’s commercial real estate market is low in inventory and increasing in its face value. The high demands are causing pressure on the market performance with the upward increase of rates in most commercial real estate Toronto.
The two main drivers, combination of historically low interest rates and relatively solid economic performance, have resulted in the upswing of commercial properties.
While there is a dearth of transit or transportation accessibility in the major commercial sectors, the commercial products are acting as a “cash cow” among investors in some areas of the country, with offers that are often well above the market values. Even with the recent pullback by large institutional investors and real estate income trusts, the bidding wars among the small and large investors remain hot.
In response to dwindling supply and the high demands of small investors and end users of commercial property Toronto, the sales softened by 73 percent in 11 major markets. The reports examined: “The trend is especially evident in terms of demand for industrial real estate where a limited supply of product has generated the lofty prices now attached to that sector.”
Instead of seeking rents, commercial realtors are buying the shops and units above the stores for residing purposes, as the commercial property Toronto remains tight and the rental apartments often cost less than buying condominium, while serving as a workplace. Even the leasing out of the spaces can easily go for a top dollar figures.
Hamilton, the hub of commercial real estate boom in the GTA-area, proved to be an exception to the rule with 15 percent boost to the Commercial transactions as the ninth month of 2013 came to its end. The major investors are from Toronto area, but the foreign investors are also on the hunt.
Whereas, smaller industrial sectors that are lying at on the outskirts of Toronto, suffer from one of the most challenged commercial investments. The majority of local and foreign investors, intent to keep long term hold on real estate in GTA despite the commercial property supply issue.
The future prospects of commercial real estate Toronto remain a traditional “big fish” game, yet the buyers seem to remain undaunted.
“Little is expected to change heading into 2014, which makes inventory the ultimate wildcard in commercial performance”, notes the ReMax report.