There has been a great deal of talk recently about how great the Toronto real estate market is and how it has helped Canada rebound out of recession. However, there is another sector to the real estate market that brings in billions a year and it is not doing well. In fact, it is doing [...]

There has been a great deal of talk recently about how great the Toronto real estate market is and how it has helped Canada rebound out of recession. However, there is another sector to the real estate market that brings in billions a year and it is not doing well. In fact, it is doing horrible. It is the Toronto commercial real estate market.

 While 2009 saw great recovery for the Toronto home real estate market, the Toronto commercial real estate market saw its worst year in a decade. In the Greater Toronto Area, there were only 990 transactions done, making up $5.4 billion in investments. This may seem like a lot but in 2007, when the commercial market was at its peak, roughly $12.5 billion in investments were done in the Toronto area.

 Most of the transactions done in Toronto this year were done between October and December. During this quarter, the number of transactions over $10 million increased by 76 percent over the third quarter of 2009, with a value of $1.35 billion, more than doubling the $581 million of the third quarter.

 Since 2008, the market has continued to decline all the way up to the fourth quarter of 2009. Many buyers are waiting to buy because they want to see if the price of the properties is going to fall anymore so they can save some money on their purchase.

 The fourth quarter increase was led by the office sector, which saw an increase in sales of 384 percent over the third quarter. Most of this was thanks to Allied Real Estate Investment Trust, who purchased 151 Front Street for $180 million and the Bloor Street Towers for $164 million.

 Home builders also helped increase the market, especially with the $100 million acquisition deal of Beckett Farms by TACC Construction.

Sales in the industrial real estate market did well and saw its best increase since the start of 2008 with 100 transactions that helped to push this sector of the commercial real estate market in Toronto to $500,000,000.

 While most will not care about the commercial real estate market because they are buying homes not offices, this is a good indicator of just how well the economy is doing. When there is not much commercial buying going on, then there are economic problems. Thankfully, it appears that after a bad 2009, the Toronto commercial real estate market is improving.


Posted: 2010-01-25 09:01:11

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