- What GTA multifamily sales volume ballooned 1,069% annually to $1.06bn in Q3
- Why A handful of larger transactions from institutional investors accounted for the majority of sales volume
- What next The market is expected to remain strong amid improved borrowing conditions
A seismic boom in multifamily sales volume was seen in the Greater Toronto Area during the third quarter of the year, Colliers said in a report released today.
Total sales volume reached $1.06bn in Q3, a 1,069% year-over-year increase and a 183.2% quarter-over-quarter increase. A larger number of transactions, however, was not to blame.
Institutional investors began to reemerge amid improved lending conditions, Colliers said. Although only 13 transactions took place, they were larger deals encompassing 3,087 suites, averaging 237 units per deal.
A handful of notable transactions accounted for this bump in sales. Brookfield paid $437.2m for 1,188 units across two Toronto buildings at 77 Davisville Avenue, 40 and 50 Alexander Street and 55 Maitland Street.
Starlight Investments picked up two rental buildings, also in Toronto, comprising 618 units, for $216.3m.
Canadian Apartment Properties REIT offloaded the 369-unit Park Vista Apartments in Toronto to Moreton Properties for $133m, and Equiton picked up four properties from Starlight and Blackstone for $130.2m.
“We expect institutional sized deals to continue into 2025 – perhaps not at the same rate as Q3 since the smallest multifamily transaction above 10 units was $28 million,” said Kyle Lindsay, head of Colliers’ multifamily group in Toronto.
The average price per suite was up 1.1% year over year to about $328,000. Colliers noted that core assets with significant value-added improvements commanded a higher-than-average price per unit, reaffirming institutional investors’ preference for stability and long-term growth.
The average capitalization rate was 4.23% in Q3, up 56 basis points year over year.
The multifamily market is expected to remain strong as borrowing costs continue to fall and more institutional capital flows back into the market. Colliers said the stage is set for more deals in early 2025, when financing is even more attractive and sellers likely can maximize value on dispositions.
“With positive market indicators and the key interest rate coming off, we expect transactional activity to increase to historical averages seen prior to 2022,” Lindsay said.
