What's driving investor interest?
Commercial real estate investment in the Greater Toronto Area (GTA) rose to $3.1 billion in the first quarter of 2025, a 26% increase compared with the same period in 2024, according to Avison Young’s latest investment report.
Industrial assets led all property types, accounting for $1.4 billion, or 45% of the total investment volume. Although this represented a 7% decline from Q4 2024, it marked a 28% year-over-year increase. The sector remains attractive to investors due to tight leasing markets—GTA-wide industrial availability held at just 4%—and comparatively lower costs of holding vacant space. Stable tenant demand and plateauing rental rates have also supported investor confidence.
Retail investment experienced the most significant growth, surging 60% year over year and 73% from the previous quarter to reach $937 million. The sector accounted for 30% of total GTA investment. According to the report, necessity-based retail assets, such as food-anchored strip malls and properties with pharmacy tenants, remain highly sought after for their resilience during uncertain economic conditions. The largest transaction of the quarter was the $375 million sale of the Oshawa Centre mall.
“The market remains very active, with investors willing to pay higher pricing for the most desirable assets and lenders willing to facilitate these transactions for assets that are expected to perform well despite economic uncertainty,” the report noted.
Shifts in the market
ICI land investment reached $437 million in Q1 2025, representing 14% of total investment. While this was a 39% drop from the previous quarter, it marked a 40% increase year over year. The activity was concentrated on a limited number of large deals, including city and school board acquisitions. Despite elevated development costs and uncertain timelines, well-located land remains in demand at competitive pricing.
Multi-residential investment dropped 25% year over year and 61% quarter over quarter to $208 million, comprising 7% of the market. The report noted that while rental housing assets offer reliable income and growth potential, many owners are holding onto properties, limiting supply for potential buyers.
The office sector continued to lag, with investment falling to $134 million—down 75% from Q4 and 38% year over year. This marked the lowest quarterly investment total in the office sector in more than 15 years. Despite the decline, leasing activity has improved and lender willingness to finance office purchases has strengthened modestly, provided the asset and borrower meet quality benchmarks.
Smaller Canadian private investors and foreign buyers, particularly those from Asia, are increasingly active in the market. With institutional investors largely on the sidelines, these groups are leveraging current conditions to acquire properties. Canada’s perceived stability has bolstered international investor confidence.
Avison Young’s report also highlighted that the number of transactions in Q1 2025—370 in total—was consistent with the 2024 quarterly average, suggesting that the volume decline was more about the absence of large deals than a slowdown in overall market activity.
What are your thoughts on the GTA’s commercial real estate trends? Share your experiences in the comments below.
