Investors are eyeing one sector despite a sharp drop in activity
Investment in the Greater Toronto Area’s commercial real estate market slowed significantly in the second quarter of 2025, with total investment volume dropping 36% compared with the same period last year, according to a new report from Avison Young. The total volume for Q2 2025 was $2.7 billion, down from $4.3 billion in Q2 2024.
The report, Greater Toronto Investment Review Q2 2025, noted that while dollar volume declined, the number of transactions increased 14% quarter-over-quarter. It also said this trend reflects a scarcity of large-scale deals and a shift toward smaller transactions across the market.
Industrial assets remained the dominant sector, accounting for 45% of total investment volume at $1.2 billion. However, this was a 35% decrease from Q2 2024. Despite the decline, the industrial sector continues to attract investors due to a tight leasing market, with an availability rate of 4.3% across the GTA. The average sale price per square foot for industrial assets was unchanged year-over-year at $363.
Source: Avison Young
The office sector also faced a difficult quarter, with investment volume down 48% year-over-year to $271 million. However, the report highlights a slight improvement in sentiment due to increased return-to-office requirements from major corporations and a quarter-over-quarter decline in GTA-wide availability to 20.1%. Smaller deals involving user-purchasers and private investors are becoming more common as they capitalize on opportunities in a less crowded market.
In contrast, the multi-residential sector showed resilience. Following a slow first quarter, investment volume jumped 136% quarter-over-quarter to $490 million, an 18% increase year-over-year. The report attributes this resilience to the sector’s stable income potential and long-term growth prospects. The largest single transaction of the quarter was the sale of a two-building, 416-unit portfolio in Brampton for $132 million.
Distress sales also rose through the first half of 2025. Year-to-date, there have been 33 sales valued at $124.8 million, up 43% in number and 40% in value compared with the first half of 2024. The report suggests these sales may increase further in the second half of the year due to challenging market conditions.
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