- Rent growth accelerated in the multi-suite residential rental sector during the third quarter.
- Industrial warehouse and logistics properties continued to attract market interest with relatively attractive selling prices.
- Class A segment of
Toronto's downtown submarket recorded the strongest performance this quarter in the office leasing market. - Commercial property investment sales activity remained muted, in line with a year-long trend.
"The industry has the potential to rebound in early 2024 depending on the central bank's rate decisions and the effects of the monetary policy," said
The multi-suite residential rental sector experienced accelerated rent growth with the average asking rent for purpose-built units in the country's 35 top markets rising by 14.6% year-over year as of
Rent growth is expected to moderate in the near term following the acceleration in the third quarter. This can be attributed to significant deceleration in job growth for the remainder of this year and into early 2024. Additionally, international migration volume is projected to moderate, and young workers will hesitate to secure rental accommodation amid economic and labour market uncertainty.
Investment sales activity in the commercial property sector remained muted in the third quarter, consistent with a year-long trend. Industrial property sales slowed once again in the third quarter, following a surge in sales during the second quarter. Core-quality warehouse and logistics properties continued to sell at relatively attractive pricing levels. Nonetheless, industrial property sales volume is expected to remain below the medium-term average for the foreseeable future, as buyers stay on the sidelines while interest rates remain high, and the national economy slows.
The third quarter also witnessed a sluggish office leasing market, continuing the trend of the past few years. Leasing demand fell short of supply during the three-month period with the strongest demand observed for high-quality space in the country's class A buildings. Some businesses were able to upgrade their space at a reasonable cost, continuing the market's flight-to-quality trend.
The retail investment sector reported very few significant transactions during the third quarter, aligning with the year-to-date trend. Owners of retail assets have prioritized operations, leasing, and value enhancement through density additions in recent years. Properties with grocery store anchors and tenants selling necessities continued to attract interest, but the availability of properties fitting this profile was limited.
Economic Factors
The
The third quarter update released today by
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