Short of zoning changes or neighborhood decline, ICI properties (industrial, commercial, institutional) are reliable long-term commodities. For inexperienced real estate buyers who get over-involved personally with buying rental homes, commercial investing allows a balanced real estate portfolio.
Here’s what’s moving in commercial and residential property investing:
- Commercial real estate investments dropped 23% in fall 2020, but that’s still a 30% recovery over Q2, according to data marketer Altus Group. Opportunities abound for aggressive Toronto area investors who can swoop in with cash or solid financing already in place.
- Residential land investing led the way, followed by purchasing industrial land and land assembly for apartment sites. Apartments outperformed other income asset classes despite COVID-19 restrictions, Altus reports.
- Investor discounts dominated land pricing. Vendors held onto land longer to avoid selling at discounted rates, inflating a supply crunch.
- Warehouse and industrial sales remained strong due to online selling pressures for storage and packaging space.
- Office leases, hotel sales, and retail space vacancies were all affected by stay-at-home orders from employers and public health officials. That will likely see an uptick with widespread vaccinations and the lifting of travel restrictions. But single-asset investments remain problematic, experienced commercial brokers Mortgage Alliance Commercial advises.
Social distancing didn’t stop Greater Toronto Area home buyers. TRREB predicts average home prices of $1 million by year-end 2021, with investment opportunities in low-rise new build apartments for middle-market renters. Whether inflationary pressures persist in 2022 or are temporary is yet to be seen.