Summer is a hectic time, with a rush of both family and business commitments requiring our attention. It’s easy to miss big news … so as is our tradition at RENX, here’s our synopsis of our most-read, and most important, articles from the summer months.

2024 was a summer like no other in recent memory, with the Bank of Canada beginning a new cycle of interest-rate reductions, a paucity of major transactions in all the CRE sectors, and even uncertainty in the multifamily and condo sectors as the economy, costs and permitting issues continue to impact development. This despite rising demand for new housing across the country.

We’ve tried to include articles from a wide range of commercial real estate sectors and geographies in our summer review. We also note they are not presented in any particular order, though we have tried to group them roughly by sectors or locales.

And, a reminder / invitation: If you have a major transaction, development or other commercial real estate-related news to share with RENX readers, send us a note to let us know. In the meantime, welcome back!

Fengate makes $1.8B investment in eStruxture data centres:

Fengate Asset Management is making a “ground-breaking” $1.8-billion investment into eStruxture Data Centers to provide the company with capacity to expand its nationwide network. “The record-breaking investment is the single biggest to ever be made in the Canadian data centre sector . . .”

Altus to sell property tax service to Ryan, LLC for $700M:

Altus Group announced a definitive agreement to sell its global property tax business to international tax services and software provider Ryan, LLC for approximately $700 million as the firm continues to transform to a pure-play commercial real estate software, data and analytics platform.

Chartwell announces acquisitions of over $700M of Canadian seniors residences: 

Chartwell Retirement Residences just announced its latest acquisitions: 384 suites in three retirement communities on British Columbia’s Vancouver Island for $226.9 million. That adds to a long list of portfolio acquisitions in 2024, totalling over $700M.

CAPREIT bulks up liquidity with $740M portfolio sale to TPG:

CAPREIT is selling its Canadian portfolio of 75 manufactured homes communities to TPG Real Estate for $740 million, a move president/CEO Mark Kenney called a major step toward becoming a pure-play apartment REIT. It also announced an additional $477M in transactions, including $387M in Q2 acquisitions (https://renx.ca/capreit-bulks-up-new-apartment-buildings-477m-transactions).

Crestpoint, Anthem partner to make two major Vancouver acquisitions:

Crestpoint Real Estate Investments and Anthem Properties continue to expand their relationship, with Anthem announcing it is acquiring stake in a master-planned Crestpoint redevelopment at “the Boot” in Burnaby, B.C. The partners also acquired a Vancouver development site –  1318 Thurlow St. –  where they plan a 32-storey purpose-built rental tower (https://renx.ca/crestpoint-anthem-partner-to-acquire-vancouver-high-rise-dev-site).

Groupe Mach buys Montreal office tower from BentallGreenOak:

Groupe Mach purchased a 17-storey, 256,574-square-foot property at 1600 Rene-Levesque Blvd. W. from BentallGreenOak, in a deal that bucked the recent trend of few significant office trades. 1600 Rene-Levesque was one of the country’s largest office transactions during the summer.

AIMCo acquires $129M Montreal industrial portfolio from Pure:

Alberta Investment Management Co. (AIMCO) has acquired a five-building industrial portfolio in Greater Montreal for approximately $129.2 million. The buildings are in Lachine and Dorval and comprise approximately 455,000 square feet.

There’s big demand in Canada’s retail shopping centre market:

In a commercial real estate environment largely devoid of major transactions, one sector continues to surprise: retail. In the wake of media reports that Quebec City’s massive Galeries de la Capitale mall is for sale, another major transaction could be in the offing.

Retail rents continue to rise, little new space on the way:

Canadian retail real estate rents have continued to rise and, with little significant new supply on the way to meet demand, that trend is expected to continue, CBRE’s H1 2024 Retail Rent Survey states. A case in point were three Alberta shopping centre acquisitions by Crestpoint and Trinity Retail Fund (https://renx.ca/crestpoint-expands-alberta-portfolio-buys-3-shopping-centres).

Allied Properties’ debt downgraded to ‘junk’ by Moody’s:

Moody’s Ratings downgraded office owner and operator Allied Properties REIT’s senior unsecured debt rating to junk status, dropping it one level to Ba1 with a continuing negative outlook due to what the agency considers ongoing high debt levels.

Slate Office REIT receives notices of default:

Slate Office REIT’s financial troubles are continuing, as the trust announced it received notices of default for its revolving credit facility, and an expectation to also go into default on interest payments for three debentures.

Broccolini considers return to its roots: Rental housing development:

Broccolini is seriously considering a return to its roots by building rental housing for the first time in about 50 years as the condo market continues to slump, Michael Broccolini, CIO and president of the Montreal developer’s real estate group told RENX. Major projects in Montreal and Toronto would be affected by the move.

Greystar in early stages of Canadian expansion:

Greystar named John Wilbeck managing director of its Canadian operations as the U.S.-based firm moves to increase its presence north of the border. As part of the strategy, it is well underway developing a 593-unit multifamily rental project with over 110,000 square feet of grocery-anchored retail at its University Heights Shopping Centre property in Saanich, B.C.

Epic Investment Services execs become majority shareholders:

Epic Investment Services is now 100 per cent employee owned, with managing partner and CEO Craig Coleman and managing partner, CFO and COO Laetitia Pacaud becoming its majority shareholders.

KingSett affordable housing fund seeks to make a big impact:

The $180-million KingSett Affordable Housing Fund LP closed on the acquisition of Birchmount Green in the east end of Toronto and continues to push ahead with development and planning for other large-scale multiresidential sites in the city.

Source Renx.ca. Click here for the full story.

Mattamy Homes and QuadReal Property Group have scheduled a fall launch for Phase 1 of their condo project The Clove, part of the $6-billion redevelopment of Cloverdale Mall in Etobicoke.

The 33-storey tower to be sited on a standalone location on a 2.3-acre gateway site at 2 & 10 The East Mall Crescent will be paired with a nine-storey midrise, totalling over 600 condo units, according to an announcement that includes final design drawings.

Both buildings play a role in the redevelopment of Cloverdale Mall, a 32-acre shopping centre, into a master-planned community. The overall plan is to add more than 5,000 condo and purpose-built rental units, two public parks and new streets at the property.

The renderings show the plan for a new street network that connects community amenities including retail, residential and green spaces.

“This first building is the singular opportunity to get in on the ground-floor as this 32-acre master-planned community takes shape over the next decade,” Niall Haggart, president of Mattamy Homes’ Greater Toronto Area urban division, said in a release.

While there was major office leasing activity in downtown Toronto in Q1 of this year, that momentum evaporated during the next three months according to Newmark’s new 2Q ’24 Downtown Toronto Office Market Overview.

Of downtown Toronto’s 85 million square feet of office space, 14.6 per cent of it was vacant the report states. That rate is a 24-year high.

The ongoing heightened vacancy is largely the result of deliveries of new supply, the office real estate cycle and structural changes in how tenants use office space due to technology. COVID-19 magnified all of these factors, according to the report from the commercial real estate advisor and service provider.

The year got off to an atypically strong start (approximately 1.4 million square feet of leasing) thanks to more than 622,000 square feet of pre-leasing in Phase 2 of CIBC Square.

More than half of that space involved a 327,000-square-foot lease signed by CPP Investments, which will move from its current headquarters at 1 Queen St. E. While that represents a major lease transaction, it also leaves open the question of what will happen at the class-A 1 Queen when CPP vacates the building, which it currently owns.

Q2, however, was the weakest in the past decade in total square footage leased downtown, at approximately 200,000 square feet, which the report’s authors say doesn’t bode well for absorption in the back half of the year.

“Absorption is the final result of many variables and as a result we can see varying amounts of absorption on a quarterly basis. One quarter doesn’t necessarily define a market and in this case, we saw significant absorption in the first quarter and less so in the second quarter based on the timing of when tenants occupied space,” Newmark director and head of Canada research Andrew Petrozzi wrote in an e-mail interview with RENX.

“We would need to see results for multiple quarters before a trend could be identified.”

Downtown south and financial core performed best

The market does continue to see strengths and weaknesses based on property class and location, he said.

“Trophy and class-A properties in downtown south and the financial core saw strong performance in the first half of 2024, while downtown north suddenly experienced more challenges than in previous years.”

“Downtown west continues to show signs of improvement after a couple of years of rising vacancy and availability.”

Landlord incentives for class-B space remain in play as the delta between class-A and -B rents continues to widen due to rental rate erosion in less desirable class-B buildings and upward pressure on class-A rents due to tenant demand. The class-A vacancy rate has stabilized at around 13 per cent.

“Class-A office space is seeing strong tenant demand in many submarkets, capturing the majority of the core’s leasing activity and enjoying the tightest vacancy rates, particularly in downtown south at 7.2 per cent and in the financial core at 12.4 per cent,” Petrozzi wrote.

“Rents for class-A space are holding steady, and in some cases even increasing, while we are seeing rents come off some in class-B space. Most built-out spaces, model suites and full-floor opportunities, particularly in well-located class-A premises in downtown south and the financial core, have been leased, which has tenants considering space in warm shell or bare shell conditions.”

The class-B vacancy rate rose to 17.9 per cent, not far behind the 18.3 per cent class-C rate.

Sublease availability had declined from 5.6 per cent in the first quarter of 2023 before stabilizing in the first half of 2024 at around 4.5 per cent.

“Tenants seeking flexibility as well as shorter term and reduced rental rates started returning to the market,” Petrozzi wrote about the sublet market. “If the sublease space was built out and ready for occupancy with no delay or additional costs, it was all the more attractive to tenants.”

More office developments planned

The current office development cycle for space that started arriving in 2020 and runs through 2025 is set to deliver more than nine million square feet, with almost 2.6 million square feet still under construction.

Despite today’s adverse market conditions, more than 4.5 million square feet of office space remains proposed in buildings larger than 250,000 square feet.

This includes:

• 890,000 square feet at 1 Yonge St.;
• 1.4 million square feet at 30 Bay St.;
• 450,000 square feet at 1 Front St. W.;
• 700,000 square feet at 200 Front St. E.;
• 270,000 square feet at 25 Liberty St.;
• 270,000 square feet at 251 Queens Quay E.; and
• 670,000 square feet at 212-220 King St. W.

“I’m unaware of any major office developments downtown that have been cancelled outright,” Petrozzi noted. “However, some developments may shift to alternative uses if the zoning permits and the building can accommodate those changes.”

Office building transactions have plummeted

Downtown core and periphery office sales came to a virtual standstill in the first half of 2024, totalling just $80.4 million with the $65 million sale of 70 York Street and the disposition of the iconic flatiron-shaped Gooderham Building at 49 Wellington St. E. for $15.4 million.

“Potential office building buyers were cautious in the first half of the year for a few reasons, including a lack of sale comparables in Toronto and across Canada, as well as outstanding macro-economic issues around interest rates and cost of capital,” Petrozzi observed. “Recall that interest rate cuts didn’t start until June, and these numbers from the first half reflect a more conservative financial outlook during a period of uncertainty about when the Bank of Canada would act.

“While workers are returning to the office in greater numbers each passing month, Toronto has been slower to recover than most other Canadian cities, which may also have a dampening effect on investors’ enthusiasm to acquire these assets at this current juncture in Toronto. That can and will change.”

Office sales totalled $1.6 billion in 2023, which represented a 21.5 per cent decline from 2022.

Minimal office condominium sales

Condominium office sales peaked between 2020 and 2022 in total dollar volume as construction was completed and transactions closed. The pre-sales of these units likely occurred during the period of record low office vacancy recorded in downtown Toronto between 2017 and early 2020.

A lack of space for lease combined with a low cost of capital helped sales of office condos as investments and a hedge against rising office rental rates typical of that period.

“Office condos have historically not been a popular form of ownership in Toronto and represent a minuscule portion of the market,” Petrozzi wrote. “While downtown leasing rates stabilize or even decline, and vacancy remains elevated, the demand for office condos generated by a tight office leasing market has diminished.

“Although declining interest rates typically boost buyer interest in office condos due to lower financing costs, the current supply and smaller developments will likely meet existing demand for now.”

Source Renx.ca. Click here for the full story.

Canadian retail real estate rents have continued to rise across all format types and, with little significant new supply on the way to meet demand, that trend is expected to continue.

“We are not adding enough retail space for the population growth that Canada is experiencing,” CBRE senior vice-president Alex Edmison, who co-authored his company’s newly released H1 2024 Retail Rent Survey, told RENX.

“One reason is some retail assets are being reimagined as mixed-use developments, so there’s a certain amount of retail inventory coming out of the system.”

It’s anticipated that quality locations will continue to be leased quickly as vacancy declines further. Retailers are being strategic and seeking sites that either improve their exposure or increase their market share, including a focus on areas with higher levels of population density.

Retail developments

It’s difficult to underwrite new retail construction as costs have been rising during a time when, until two recent cuts, interest rates were also rising and were much higher than earlier in this decade.

“Rents really need to appreciate quite significantly to justify new construction in this climate,” Edmison said. “We’re not seeing development at scale and a lot of the development that’s happening is stuff that was financed or put in the pipeline a long time ago.”

One example of this is at Royalmount, a mixed-use community in midtown Montreal that is Quebec’s largest private development. It will be home to more than 170 stores, including 60 restaurants. The first phase of the Carbonleo project is slated to open in September and half of Royalmount’s retail concepts have never previously been seen in the province.

While new supply has been limited recently in Winnipeg, mixed-use developments with retail components under construction include Shindico’s Align Winnipeg, Private Pension Partners’ The Zu and Whiteland’s Polaris Place. Qualico Properties has also begun development of the 10,000-square-foot Sage Creek Village East.

Edmonton-based Opulence Management Corp has proposed to develop Fort Saskatchewan Common, a new plaza on a 20-acre greenfield site 25 kilometres northeast of Edmonton that will include retail, office and restaurant spaces built in still unspecified phases.

“Do I anticipate much more development?” Edmison surmised. “Over time for sure, but tomorrow, no. Fundamentals just aren’t there and no-one wants to risk it. We need to see interest rates stabilize and construction costs stabilize.

“There’s a need to be comfortable with where rents are because it takes a long time to build these projects and the order of magnitude of capital needed these days is very significant.”

Luxury and discount retailers both doing well

There’s a bifurcation of tenants at opposing ends of the value spectrum, with luxury and discount doing extremely well and rising above the vanishing middle segment.

The luxury and apparel sectors have been active across high street and enclosed mall spaces and first-to-market brands continue to push into top nodes.

Meanwhile, discount grocers — including No Frills, FreshCo and Food Basics — are among the most active brands.

“Changing consumer and behavioural spending patterns could be in response to inflation,” Edmison said.

“Never in my career, which has been about 17 years doing urban retail, have I been doing so much business at the discount end of the spectrum,” he added, noting that a previous bias against discount retailers locating in mixed-use properties seems to be disappearing.

The non-traditional service/medical sector has also seen an explosion in market penetration in recent years due to government funding for private magnetic resonance imaging and computed tomography facilities as well as the incursion of international medical and pharmaceutical companies.

Varied markets are performing well

Edmison’s primary focus is on downtown Toronto retail, but he’s also seen activity growth in neighbourhoods just on the periphery of the core, including The Distillery Historic District, Canary Landing and, most recently, at The Well at Spadina Avenue and Front Street West.

Despite fewer people occupying Financial District offices with the rise in hybrid work from home patterns, Edmison has observed restaurants in the area are doing very well — even on weekends.

“As populations grow and things intensify, that is funnelling more and more business in the core areas of Toronto,” said Edmison. “We’re seeing great leasing momentum, low vacancy and healthy fundamentals.”

Edmison has been pleasantly surprised by the strength of the Halifax retail market, where Rolex is opening a store and Arc’teryx has established a flagship location.

Cities in Alberta and Saskatchewan have also been performing well, Edmison added.

Source Renx.ca. Click here for the full story.

Prologis has become a major player since reaching north from its U.S. base and entering the Greater Toronto Area (GTA) industrial real estate market 20 years ago. Its growth in Canada continues, with millions of square feet in its development pipeline.

“We’ve always been growing via development and haven’t been one that just stood in line and lined up to buy existing buildings,” Prologis vice-president and country manager Bill Bolender told RENX.

Prologis has an approximately 11-million-square-foot portfolio in the GTA. There’s another six million square feet in its development pipeline, with about 2.5 million of that now under construction across six buildings.

Internationally, the San Francisco-based firm owns or has investments in logistics properties and development projects expected to total approximately 1.2 billion square feet, spread across 19 countries. It leases facilities to approximately 6,700 global customers.

GTA properties under development

That number will be growing soon as more GTA developments reach completion.

Ground was recently broken on Prologis’ first project in Halton Hills at 8111-8119 Trafalgar Rd., on the north side of Steeles Avenue across the street from the Toronto Premium Outlets mall. Three buildings totalling around 1.3 million square feet are planned.

The first two speculative facilities are underway and expected to be completed in early 2025:

• one at 474,945 square feet with a 42-foot clear height, two grade-level doors and 66 dock-high doors;
• and the other at 496,192 square feet with a 42-foot clear height, two grade-level doors and 68 dock-high doors.

Prologis is speculatively developing two identical 158,610-square-foot distribution centres at 450 Evans Ave., just south of the Gardiner Expressway, in Etobicoke. They’re scheduled to be completed this year and will offer 36-foot clear heights, two grade-level doors, 20 dock-high doors and 2,475 square feet of office space.

Prologis broke ground 14 months ago on a distribution centre of just under a million square feet for Lululemon at 5525 Countryside Dr. near Highway 50 in Brampton that’s scheduled for completion this fall. The facility is expected to employ 1,500 people.

Prologis’ first mass timber structure

Another facility in that same Brampton business park, which will total three buildings, will be an approximately 250,000-square-foot mass timber structure.

“It’s the first of its kind in North America from the perspective of being a large-scale speculative industrial building for lease, and the first in the Prologis network,” Bolender said. “Given that everybody’s focused now on ESG (environmental, social and governance) and carbon reduction — us as well — we’re pretty excited about how it’s going to do in the market.”

The first timber column went up on July 17 and completion is expected early in 2025.

Also just north of Toronto, Prologis acquired 198 acres of land at 12519 and 12713 Humber Station Rd. in Caledon from Solmar Development Corp. for almost $500 million two years ago.

The property offers easy access to Hwy. 50 and the northern terminus of Hwy. 427. Hwy. 400 is a few kilometres to the east and the route for the planned Hwy. 413 is beside the site.

It had been earmarked as future industrial land and is now going through the entitlement process. Site plan applications have been submitted and a public meeting has been held.

“That’s seeing lots of interest, specifically from large million-square-foot-plus users,” Bolender noted. “We had a good idea of what size of blocks we were going to be able to have in that park and there’s a very limited number of sites out there that can deliver those sizes of buildings.”

Bolender is hopeful that mass grading of the site can begin within 12 months. He envisions it including four to six buildings ranging in size from a low of 250,000 square feet to more than a million square feet.

Still bullish on GTA industrial market

Bolender is working with Toronto-based vice-president and investment officer Bill Bates to uncover more GTA land acquisition opportunities.

“We love to aggregate parks and buildings in an area,” Bolender said. “For example in Milton, we have eight buildings ranging from 100,000 square feet up to half-a-million square feet.

“What it allows us to do is move customers around when their businesses grow or when they contract, or when they come and go from the market. It helps you keep your customers.”

The GTA’s growing population should mean continued increases in demand for products that go through industrial and logistics facilities. Thus, Bolender has faith in the market despite the increase in vacancy rates and decrease in rents since early 2023 due to a correction of what was an overheated market.

“Some of our competitors found it tougher to get financing and tougher to move speculative projects forward, so it’s been good for us from that perspective,” Bolender noted. “We’re confident in the Toronto market and it’s one we’re actively trying to grow profitably.”

Examining other cities

Prologis is looking for acquisition opportunities in Montreal and Vancouver to expand its Canadian footprint outside the GTA.

“We’ve always liked markets that are land-constrained and tough to get into, and definitely both of those are,” Bolender said. “The brokerages know that we’re looking for the right opportunity. So whether that’s a portfolio or a company or some large development sites, we’re just looking for the right one.”

Properties with existing buildings would likely need to have additional development potential to interest Prologis, Bolender added.

Source Renx.ca. Click here for the full story.

Automotive Properties Real Estate Investment Trust (AP REIT) plans to sell its six-acre Markham Honda dealership property in Markham, Ont., to an insider of the trust for $54 million.

The Kennedy lands property is currently operated under a long-term lease by Dilawri Group, an affiliate of the Dilawri company which is AP REIT’s (APR.UN-T) largest shareholder. A Dilawri affiliate is making the acquisition.

Located at 8210 and 8220 Kennedy Rd., and 7, 13/15 Main St., in the community of Unionville (just east of Toronto) the property is located a few metres from a major UnionCity redevelopment which is being undertaken by Metropia at the Unionville GO transit hub.

It is considered a prime future redevelopment site, and there is a clause in the purchase agreement which provides for additional compensation to AP REIT if it is rezoned in the future for density above a certain threshold.

Canadian private investors dominated Q2 commercial real estate acquisitions, representing 82 per cent of transactions according to Avison Young’s new investment trends report. But that recent trend is unlikely to continue.

Private investors had been responsible for 73 per cent of first-quarter transactions, while institutional investors saw their share fall from eight to five per cent through the first and second quarters. Private investors typically accounted for less than 60 per cent of transactions but hit the 70 per cent mark in 2022 and that ratio has continued to grow.

“When there are periods of uncertainty, a lot of these institutional buyers are waiting on the sidelines,” Avison Young principal, managing director and Canadian leader of valuation, advisory and property tax services Matthew McWatters told RENX. “I’m expecting a lot of those players to get back into it.”

Avison Young principal and director of Canadian market intelligence Marie-France Benoit told RENX that institutional investors generally own large, high-quality assets that they tend to sell to each other. They have sufficient capital and the patience to wait out market downturns.

“Institutional investors will do less transactions in number, but the average size of the transactions are larger,” said Benoit. “We account for all transactions above $1 million. If you were going into $10 million and up, maybe that percentage would be a bit different.”

Foreign investment has been low

End-users accounted for 10 per cent of transactions while others — including foreign investors, governments and developers — accounted for three per cent.

Benoit said there were a few very large acquisitions by foreign investors over the past two years, but there haven’t been any similar significant transactions so far in 2024, which is why that last number is so low.

“They look more for large portfolios or large assets that make it worth investing in another country, and Canada doesn’t have a deep pool of products because of our size,” said Benoit.

McWatters believes there will be more acquisition opportunities for foreign investors in the second half of this year and into 2025.

Overall transaction activity picked up slightly

Overall transaction activity was up very slightly quarter-over-quarter and reached $12.4 billion through six months, down from $15.4 billion during the same period last year.

While there have been significant gaps between what sellers are looking for and purchasers are willing to pay over the past few years, McWatters said that’s starting to narrow. This should lead to more deals.

“What we’re seeing is more predictability in the market,” Benoit said, acknowledging the Bank of Canada’s June 5 reduction of the overnight interest rate from five to 4.75 per cent and the anticipation of another rate cut on July 24 as the country’s inflation rate has declined.

“More predictability brings more confidence. More confidence bring more transactions, more velocity and narrower bid-ask gaps.”

Multi-residential

The Canada Mortgage and Housing Corporation (CMHC) recently released an outlook that positioned 2024 as the bottoming of the national downward trend in housing starts from 2021 to 2023 highs. A rebound is anticipated in 2025 and 2026 fuelled by cuts to financing costs.

“Investors are very bullish on multi-res, and that’s remained throughout COVID and that’s going to continue, especially with population growth,” McWatters said. “The large demand for housing makes it a very attractive asset type for investors.”

New product is being built, which means there should be properties available to trade, and CMHC financing alternatives are available to spur further development.

Industrial

Industrial properties accounted for 44 per cent of transaction volume in the second quarter, up from 38 per cent in the previous three months.

A steady increase in vacancy rates and decrease in rents since the start of 2023 is a correction of an industrial real estate market that had overheated. Otherwise, industrial market fundamentals remain sound and the economic drivers of demand for space are pointing in the right direction for 2025.

“Some of the new supply is currently being absorbed, but it was a lot of new supply compared to historical levels,” Benoit observed.

The COVID-related boom in logistics and distribution activity has prompted the development of large fulfillment centres and big-bay projects since 2020. As demand for this market segment cools, there are more lease and sub-lease options across the country.

Vacancy rates for big-bay industrial are now higher than for small-bay. Demand for small-bay is positive, but new supply is limited due to higher construction and land costs, which has spurred investor interest.

Developers are trying to adapt their offerings to meet demands from smaller tenants, either by subdividing larger spaces or developing industrial condominiums.

Office

Office market dynamics present several headwinds to deal activity, which is being led by opportunistic local buyers acquiring assets at a discount.

“The biggest gap right now in terms of pricing between buyers and sellers would be in office,” McWatters said. “There’s just not an appetite right now for people to buy in.”

The hybrid office work model now has more structure with regards to anchor days, minimum days and percentage of time spent in the office, which Benoit said has presented more clarity to landlords, employers and employees.

Some under-utilized office space is being converted to multiresidential or other uses, and that’s expected to continue.

Retail

Demand for retail assets is outpacing supply. While discretionary goods spending continues to stall near November 2022 levels, a growing and diverse population driven by immigration is increasing consumer demand.

“There’s not a lot of new supply for retail, except for necessity-based strip malls in new neighbourhoods, because a lot of people have moved further from the core,” Benoit explained.

“In terms of malls and so on, there’s not a lot of new construction, so there’s limited product and the occupancy rates are good. Sales are at pre-COVID levels, so retail seems to have some interest from certain investors.”

Source Renx.ca. Click here for the full story.

Office availability rates in the Greater Toronto Area (GTA) continued to rise in Q2, with vacancy rising to 14 per cent and availability hitting 20.2 per cent, according to the latest report from Avison Young.

The sector, still feeling significant impacts from the COVID pandemic and extended corporate work-from-home policies, saw availability rise 700 bps from 19.5 per cent in Q1, and from 18.5 per cent in Q2 2023. Vacancy inched up 0.3 per cent from Q1.

There was 189.8 million square feet of existing inventory in Q2, with an additional 3.24 million square feet under construction (which will add about two per cent to the total inventory). Available sublet space rose by 419,000 square feet from Q1.

Net absorption (how much space was leased vs. vacated) was almost neutral at 15,000 square feet in Q2, compared to 473,500 square feet so far this year.

Despite increased supply, the average asking net rental rate for available space for all office classes rose to $27.30 per square foot, primarily because of trophy buildings in downtown Toronto.

Avison Young also looks ahead to proposed changes to Toronto’s office replacement plan, which “could be a reduction in the market’s overall office inventory”.

Two subsidiaries of Toronto’s Baz Group of Companies have announced significant acquisitions: Marlin Spring has purchased a Toronto development site at 5280 Dundas St., W., and Spring Living has acquired seven retirement residences in Ottawa and Montreal.

5280 Dundas St., W. is in the Toronto borough of Etobicoke, near Kipling Ave. The property is slated to become a transit-oriented, mixed-use high-rise residential development.

Marlin Spring intends to move ahead with a project which will add 400 new residences to the Toronto market.

“Marlin Spring Developments is proud to strengthen its presence in Etobicoke. This acquisition is specifically located in the Etobicoke centre, which is very well serviced by public transit and by a myriad of existing amenities and local retail that will continue to grow as the neighbourhood evolves,” Pedro Lopes, the CEO Marlin Spring Developments, said in the announcement Tuesday afternoon.

“This property is located just a few minutes’ drive from Joya, Curio and the Taylor, a few of Marlin Spring Developments’ projects in Etobicoke, all currently at various stages of development, sales and construction.”

Spring Living acquires 7 residences

Baz Group’s Spring Living Retirement Community will grow its portfolio by over 1,230 suites with the acquisition of the retirement residence portfolio in Montreal and Ottawa.

Spring Living was created in 2021 when it took over eight former Revera retirement residences. Marlin Spring had previously acquired two other residences, giving it 10 properties in Ontario at that time. The firm had grown that to 15 assets prior to this acquisition.

Along with the additional residences, it has acquired assets and retained employees from Horizon Retirement Management Inc., to facilitate Spring Living in providing management services to the retirement residences in Quebec.

“We are pleased to provide 21 retirement communities in urban markets to further serve the Canadian senior population,” Lois Cormack, CEO, Spring Living Retirement Communities, said. “With this acquisition, we are delighted to welcome over 500 team members who will continue in their current roles, positively impacting the lives of over 1,000 residents, families and communities served.

“We are delighted that we can operate the acquired Quebec residences under the Horizon brand, a well-known and experienced senior living management company.”

No financial details were provided for either of the acquisitions.

“We are very excited to have grown our portfolio with these significant acquisitions,” Benjamin Bakst, CEO of Baz Group, said in the announcement. “Current economic conditions have created challenges in the North American real estate market. However, these same conditions present unique opportunities for strategic growth and investment. Our recent acquisitions and partnerships reflect our commitment to adapting and thriving amidst these challenges.”

About the Baz Group

The Baz Group of Companies is one of Canada’s largest privately-owned real estate firms with a portfolio of over 20,000 units in various stages of development, construction, repositioning and completion.

Its portfolio represents more than 16 million square feet of gross floor area across Canada and the United States with a completion value of over $10 billion. Through its operating companies supported by a team of over 1,000 professionals, Baz Group has investments spanning the development, multifamily apartments and retirement community sectors in seven North American markets.

Source Renx.ca. Click here for the full story.