- What Multifamily investors are cautiously coming back to the market
- Why Interest rates stabilized in the later half of 2024
- What next Buyers are being more selective in 2025
Multifamily markets across Ontario are making a “cautious comeback” as fund managers start returning to the table, JLL said in a new report.
The past three years have seen a clear reduction in multifamily transaction activity, with deals requiring strategic negotiation, time and beneficial debt structures. Private investors have remained the most active players in the market, but in recent months, the larger players have reemerged, with interest in new purpose-built rentals as well as value-added properties.
Still, multifamily deals have by no means been easy to close.
“Whether private or institutional, multifamily buyers of 2025 are more selective in their acquisitions than in the past,” said Michael Betsalel, JLL’s Ontario multifamily practice lead. “Deals require engagement and participation from both seller and buyer and are taking longer to complete.”
Activity picked up toward the end of 2024 as interest rates stabilized. In Ottawa, for example, $290m of multifamily transactions occurred throughout the year. More than 60% of that took place in Q3, coinciding with a 75-bps reduction in the overnight interest rate.
A similar trend was observed in the Greater Toronto Area, with much of the $1.92bn of transaction volume occurring in Q3, when financing conditions improved.
“The market demonstrated signs of renewing investor confidence, with a continued demand of strategic buyers focusing on fewer but larger deals for high-quality assets in prime locations,” JLL said.
Although the GTA’s investment volume was up 73% compared to 2023, the number of transactions slipped 11% to 58. With larger assets being purchased, the number of suites traded jumped 53% to 5,428.
It was a different story in Southwestern Ontario, where activity slowed for the third straight year. Transaction volume slipped 24% to $547m, with the number of transactions inching up 3% to 72.
“Overall, decreased competition and softer buyer valuation parameters resulted in average price per suite decreases and a higher average cap rate, reflecting a market adjusting to elevated borrowing costs earlier in the year,” JLL said.
Hamilton, however, stood out as an exception, with investment volume ballooning 1,012% to $174m. More than half of that came from three transactions: Lankin Investments’ purchases of 123 Charlton Avenue East and 100 Forest Avenue for a collective $75.3m and the sale of 325 James Street South to an unknown buyer for $20m.
Average capitalization rates increased in most major markets. They rose to 5% in Ottawa, 4.3% in the GTA and 4.68% in Southwestern Ontario. Hamilton was again an exception, with cap rates there dropping 25 bps to 4.35%.
