The power of the multi-residential asset class has waned in
Toronto, ending up as the least traded commercial property type
during the first quarter of the year, according to Avison Young’s
latest Commercial Real Estate Investment Review: Greater
Toronto Area study.
Avison Young cited extreme scarcity, rather than thinning
interest among investors, as the main driver of the trend.
GTA’s multi-residential property had $236 million in sales
during Q1 2019 (with a 9% market share), considerably lower than
the $288 million seen during the same time last year.
“The top transaction was the $30-million sale of 15 Walmer Rd.in
Toronto’s Annex neighbourhood, representing nearly $385,000 per
unit and a cap rate of 2.2%,” the report noted.
“Starlight Investments, among the sector’s most active players
in 2018, also made the top five with its purchase of a 79-unit
Mississauga townhouse complex for almost $27 million.”
A significant drop was observed from Q4 2018 (activity
representing a total of $602 million), which itself already
suffered an even more massive decline from Q3 2018 (activity
reaching a peak of $1.2 billion).
GTA’s overall commercial sales – covering industrial, retail,
office, multi-residential, and ICI properties – fell by 18%
quarter-over-quarter to end up at $2.7 billion.Q1 2019 was the
second consecutive quarter
Metro Vancouver’s robust industrial market has seen sales
activity surpass $150 million during the first quarter of the year
alone, according to Avison Young’s Spring 2019 Metro Vancouver
Continuing the red-hot trend set by the record-breaking $1.8
billion in investment last year, the market reached a historically
low vacancy rate of 1.2% at the end of Q1 2019.
Strong demand and constrained land supply pushed the region’s
vacancy level down to the lowest level nationwide for the quarter,
Avison Young noted in its study.
The crucial factor is “the ravenous appetite for industrial real
estate among tenants, owner-occupiers, developers as well as
private and institutional investors to date in 2019,” the report
added.“Developers remain unable to keep up with demand as
industrial vacancy in Metro Vancouver has now remained at less than
2% for the past three years (and less than 1.5% through 2018)
despite the addition of more than 10.2 million square feet in the
past 36 months.”
“While construction of lease product is continuing by
institutional investors seeking to hold assets long term as well as
by those developers who acquired land at historical costs, the
volume is unlikely to have much of an impact on vacancy,” Avison
Young principal Garth White explained.
“Much of this
The federal and Quebec governments have announced the first of a
series of new developments aimed at the growing post-graduate
student demographic in Montreal.
Woodnote Co-operative is slated to be a 90-unit affordable
housing project, and it will herald the construction of over 160
affordable rental units in up to three separate developments across
“Post-secondary students in Quebec will soon have new affordable
housing options thanks to a new funding model dedicated to creating
affordable rental units specifically for students,” the governments
“This innovative financing model allows student unions and
similar organizations to more easily obtain equity and acquire
additional funds to develop affordable rental housing projects.This
is a first in Canada.Further, this financing model allows the
construction of student housing at little to no risk for
universities and colleges.”
The governments added that as much as $3 million will be
invested in the creation of the housing complexes.
Montreal is home to two of Canada’s leading universities and a
thriving AI research scene.The market is expected to enjoy
accelerated commercial development in the near future, brought
about by sustained demand from tech firms seeking even more
“[R&D is] encouraging the development of new purpose-built
rentals to meet the growing demand.Rental rent growth will remain
robust this year despite
The GTA office market saw the absorption of 763,000 square feet
during the first quarter of this year, with much of the activity
occurring in the downtown and Toronto West areas.
This volume has pulled down availability to a decade-low of
8.6%, according to Avison Young’s First Quarter 2019 / Office
Market Report:Greater Toronto Area report.
Vacancy also went down to 5.6%, with the downtown experiencing
even tighter market conditions at a vacancy rate of 1.9%.
The absorption has considerably outstripped the addition of
503,000 sq.ft.of new supply.Additionally, 94% of this new volume
has already been preleased.
“The Greater Toronto Area (GTA) office market recorded
impressive results in 2018, fuelled by the insatiable demand for
downtown office space – not only from traditional occupiers, but
also a growing cohort of technology and co-sharing tenants,” the
Q1 2019 represented the continuation of these trends,
characterized by declining availability, robust development
activity, and “significant upward pressure on rental rates in
select markets and asset classes.”
Around 11.2 million sq.ft.of office property is either confirmed
or being currently built, representing 6% of the GTA’s existing
office stock.However, only 1.1 million sq.ft.is scheduled for
completion by the end of this year.
Most of this new space will be situated
Rental completions in Toronto hit a quarter-century high during
Q1-2019, and it’s buoying hopes that the city might finally be on
its way towards solving a critical supply problem.
The 1,849 units were nearly five times the quarterly average
going back to the first quarter of 2016, according to Urbanation,
which furthermore noted that, considering there have only been
13,250 units built in 14 years, it is a considerable
“While vacancy rates surveyed within purpose-built projects
(completed since 2005) remained extremely low at 0.6%, rent growth
showed moderation in the first quarter,” said an Urbanation
report.“Purpose-built rents for units available for lease during
the quarter grew by 5% year-over-year on a same-building basis,
slowing from a 9% annual pace at the end of last year in Q4-2018.As
of Q1-2019, purpose-built rents in buildings completed since 2005
averaged $2,398, or $3.25 per square foot (psf) based on an average
size of 738 sf.”
Condo rents had a strong Q1 showing, although there are signs of
“Condominium rents, on a same-building basis, grew 7.7% psf in
Q1-2019, compared to a 9.2% annual increase in Q4-2018,” continued
the report.“Monthly condominium rents for units leased during the
first quarter averaged $2,376 ($3.28 psf) across the GTA, 7.8%
higher than a year ago.”
The Federation of
The Canadian Civil Liberties Association has petitioned for a
judicial review of the Quayside smart city project by Sidewalk Labs
in Toronto, amid anxiety that Canadians will be used as “Google’s
Among the chief attractions of the development is its widespread
use of “Internet of things” sensors, a feature that has both earned
praise for pushing the envelope in urban design, and alarm over
possible privacy rights violations as the sensors would collect
data gathered from residents, workers, and visitors.
The fears have been amplified further by the fact that Sidewalk
is planning to expand similarly sensor-laden communities into the
Port Lands, should the Quayside development prove to be a
To assuage the concerns, Sidewalk Labs – a subsidiary of
Alphabet Inc., the parent company of Google – said that it will not
be monetizing the data, and that it will depersonalize all such
information collected by the sensors.
The CCLA was not swayed by these assurances, however.The group,
along with Toronto resident Lester Brown, filed an application with
the Superior Court of Justice, seeking to invalidate any agreements
established between Sidewalk Labs and the organization responsible
for the area’s redevelopment projects.
“Waterfront Toronto, and our federal, provincial and municipal
governments sold-out our constitutional rights to freedom from
Vancouver real estate investment volume is shrinking due to
perceived instabilities in the market’s regulatory regime,
according to CBRE Ltd.
The successive introduction of new regulations that target
foreigners has done no favours for the market in terms of
investment.If anything, Toronto is benefiting more from the
“You have policy changes on a snap, on a whim,” CBRE
Ltd.executive vice president David Ho told Bloomberg in an
“Investors typically look at stability in a market and this is
CBRE figures indicated that from the $1-billion-plus volumes
seen in 2016 and 2017, foreign investment in Vancouver sharply
declined to just nearly $350 million in 2018.
In comparison, Toronto significantly exceeded its 2017 volume
with its $526 million in Asian investment last year.
Speculation levies, a wealth tax on homes, and the recently
proposed Landowner Transparency Act scared off a considerable
number of foreign capital holders, CBRE added.
Moreover, Toronto’s status as a vital global tech hub – which
continues to magnetize millennials and immigrants – has proven to
be a major boost for its commercial and industrial property
sectors.Many members of the two demographic groups participate in
the city’s flourishing tech and financial services market.
“That spells money because young people have to consume, they’re
There was an increase in purpose-built rental apartment
completions in the first three months of 2019.
Urbanation says that completions hit a 25-year high of 1,849
units, nearly five times greater than the quarterly average since
Q1-2016 and represented significant growth considering only 13,520
units have been built since 2005.
But for owners and investors, the increased supply meant weaker
rent growth despite strong demand and low vacancy rate.
Purpose-built rents for units available for lease during Q1,
2019 grew by 5% year-over-year on a same-building basis, slowing
from a 9% annual pace at the end of last year in Q4-2018.
As of Q1-2019, purpose-built rents in buildings completed since
2005 averaged $2,398, or $3.25 per square foot (psf) based on an
average size of 738 sf.
On a same-building basis, condominium rents grew by 7.7% psf in
Q1-2019, compared to a 9.2% annual increase in Q4-2018.Monthly
condominium rents for units leased during the first quarter
averaged $2,376 ($3.28 psf) across the GTA, 7.8% higher than a year
Demand lags supply
The volume of condominiums leased through MLS grew by 13%
year-over-year in Q1-2019 to 6,005 units, but supply grew faster
than demand pushing down the ratio of leases-to-listings to 73% —
the lowest level in four years.
The spring season is not expected to provide much relief for
Canada’s challenged housing market.
RBC Economics sees a continuation of the weakened demand
resulting from a cocktail of negatives for homebuyers including the
mortgage stress test, interest rates, economic uncertainty, and
In a report this week, senior economist Robert Hogue says there
was no break in March from the housing market slump.
Sure, there were some positives, a slight pick-up in Toronto for
example with sales up 1.8%.But this barely dented the effects of a
9% drop in the previous month.And tight supply accelerated price
growth after a pause.
Vancouver, Calgary, and Edmonton all saw a deepening of the
slump and Vancouver sales were the weakest since the recession
Hogue says the impact of poor weather earlier in the year may
have been limited and he says it’s likely to be a quiet spring
season, especially as measures to help first-time buyers announced
in the budget will not be active until later in the year.
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The impact of the mortgage stress test continues to be shown in
home sales in British Columbia.
British Columbia Real Estate Association says there were 5,707
sales through the MLS in March, down 23% year-over-year, while the
average price was down 5.4% to $687,720.
“BC home sales continue to be adversely impacted by federal
mortgage policy,” said BCREA Chief Economist Cameron Muir.“The
erosion of affordability caused by the B20 stress test has created
near recession level housing demand despite the province boasting
the lowest unemployment rates in a decade.”
Total sales dollar volume was $3.9 billion, a 27.1% decline from
the same month last year.
Listings increased 36.2% to 34,295 units from a year earlier and
the ratio of sales to active residential listings declined from
29.4% to 16.6%.
“The sharp erosion of affordability caused by the B20 stress
test is now creating pent-up demand, as many would-be home buyers
are forced to wait on the sidelines,” added Muir.“Unfortunately,
new home construction is slowing as well, which will likely lead to
another housing supply crunch down the road.”
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one of our mortgage experts to tell you exactly how much you can
afford to borrow, which is
In an effort to curtail money laundering through real estate in
British Columbia—a well-documented problem—a group of organizations
are lobbying the provincial and federal governments with the
appropriate steps to take.
The British Columbia Real Estate Association, the Appraisal
Institute of Canada-B.C.Association, B.C.Notaries Association,
Canadian Mortgage Brokers Association-British Columbia and the Real
Estate Board of Greater Vancouver collaborated on how to tackle the
problem and also released their joint recommendations to the
Given that multiple parties are involved in real estate
transactions, the group says that it will require a coordinated
effort to ensure that unscrupulous forces are kept at bay and
prevented from washing dirty money through the province’s real
“A real estate transaction involves multiple professionals.It
will take a coordinated effort by all involved, working in
collaboration with government, to stop money laundering.The joint
recommendations and best practices submitted by these organizations
reflect their commitment to the professionals and consumers they
serve,” read a media statement.
A major barrier for would-be money launderers is insistence upon
only accepting verified funds, and the group recommends all sectors
of real estate align on that point.
Additionally, mandatory anti-money laundering education is
recommended for all real estate professionals so that they can
identify suspicious activity and accordingly report it.
“FINTRAC [Financial Transactions and
Major developer Cortel Group is spearheading multiple high-rise
condo projects in Ontario.
The Towers 3 and 4 luxury condo buildings, representing the
final phase in the much-anticipated Oak &Co.luxury condominium
complex, are scheduled to officially launch on April 27, 2019.
Towers 1 and 2 are already being build, while Towers 3 and 4
will be entering the Toronto market starting at the $300s, Cortel
Group said in its announcement.
“Located at Trafalgar and Dundas East in the Uptown Core, Oak
&Co.will be pivotal in shaping the area’s visual landscape
while providing countless amenities and creating its own identity,”
the developer added.
“Situated right in between Morrison Creek Natural Heritage Park
and the Uptown Core community, Oak &Co.is a wonderful synthesis
of the natural and urban setting that defines all of Oakville as a
whole.Most units overlook the leafy landscape by means of generous
balconies and large glazed openings.”
Meanwhile, the newly announced 60-storey CG Tower is expected to
become the tallest building in Vaughan, as well as the tallest
structure in Cortel Group’s Expo City development.
“Making its mark on the City of Vaughan was Cortel Group’s
intention and overall aim.The tower will emerge as a landmark to
the Vaughan skyline - anchoring an active urban community
complemented by Edgeley
Vancouver’s tenants are in a mad scramble for usable office
space amid a tight and competitive environment, according to Avison
Young’s Tenant Profile Report Q1 2019.
Supply scarcity and record-low vacancies are driving a steady
increase in the city’s rental rates, which will go on to fuel
future office price growth.
“Rising rental rates and highly limited availability may start
forcing tenants to consider locating outside of Downtown Vancouver
in order to fulfill their office requirements.With limited relief
until at least 2021 in terms of new development and vacancy
expected to remain historically low through 2019 and 2020, upward
pressure on rents is likely to continue for all tenant sizes,”
Avison Young explained.
Tight availability rates are forcing large-scale tenants (those
with size requirements exceeding 30,000 square feet) to “plan much
farther ahead than typical and explore future opportunities through
preleasing or backfilling space that may become available in the
future,” the report noted.“They will need to be proactive and
flexible well in advance of their lease expiry simply to find an
option that suits their existing needs, let alone improve on their
current office space.”
Meanwhile, tenants looking for space sizes of 10,000 - 15,000 sf
are faced with punishing scarcity.From Q3 2018, the availability of
such spaces declined by more than
The spring season is a mixed one for Canada’s housing markets
with some showing gains while others remain under pressure.
More than a year on from the introduction of mortgage stress
tests, the impacts are still being felt and new measures to help
buyers have not yet taken effect.
Despite some positive economic conditions, the Canadian Real
Estate Association reports that activity remains at some of the
lowest levels in years.
Home sales via Canadian MLS® Systems edged up 0.9% in March 2019
following a sharp drop in February while actual (not seasonally
adjusted) sales activity fell 4.6% year-over-year to the weakest
level for the month since 2013;and was also almost 12% below the
10-year average for March.
"March results suggest local market trends are largely in a
holding pattern," said Gregory Klump, CREA's Chief Economist."While
the mortgage stress test has made access to home financing more
challenging, the good news is that continuing job growth remains
supportive for housing demand and should eventually translate into
stronger home sales activity pending a reduction in household
There are some areas where things are improving.
While sales in British Columbia, Alberta and Saskatchewan were
more than 20% below their 10-year average for March, activity is
running well above-average in
A digital challenger to Canadian banks has announced a merger
than will help it accelerate its growth.
Vancouver-based Mogo Finance Technology will combine with
Difference Capital Financial with the combined entity expected to
be named Mogo Inc.
It will focus on its aim to become the leading fintech platform
in Canada, offering a range of banking and financial products
including a digital mortgage experience.
"This transaction enables Mogo to continue to invest in new
products and innovation, building on our leadership position in the
Canadian fintech space," said David Feller, Mogo's Founder and
CEO."We are excited by the opportunity that the Transaction
presents for shareholders of Mogo and Difference and are very
pleased to have the support of the Difference board.We look forward
to working closely with the leadership team at Difference to
complete the Transaction."
The combination will give Mogo immediate access to approximately $9
- $10 million in cash, which reflects proceeds from Difference's
two recently announced monetizations.
"The merger with Difference strengthens our financial position
and represents a significant opportunity to create value for
shareholders of the combined entity," added Greg Feller, Mogo's
President."Difference has invested in many of Canada's leading
technology companies and Mogo has built a valuable distribution
platform.Shareholders of both companies will benefit from improved