Q4 2024 Commercial Real Estate Report for Peel, Halton and Hamilton Regions
Market Report
Q4 2024
Commercial Real Estate for
Peel, Halton & Hamilton Regions
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Overview
The GTA’s commercial real estate market shows a mix of recovery and adjustment. Tenant preferences, evolving workplace trends, and sector-specific dynamics have driven activity this quarter. While some areas are stabilizing, others are still adapting to ongoing economic and market shifts. With changes coming from the other side of the border and an election year coming up, many are taking a more cautious approach with their real estate decisions.
Despite ongoing challenges, Q4 2024 saw a slight uptick in large office leasing activity. While smaller office spaces and flexible leasing arrangements remain the primary drivers of tenant demand, this increase in larger office transactions suggests selective recovery in the segment. Sublease availability remains elevated, but innovative leasing strategies and adaptive reuse projects continue to gain traction. Despite this, most major suburban markets are still seeing negative absorption.
The industrial sector, while traditionally resilient, is experiencing a slight softening. New developments completed earlier in the year have driven up availability rates. E-commerce and logistics demand remain stable, but rental growth has slowed compared to previous years with a slight decline. After the massive growth seen during the pandemic the market is due for some correction. Despite these trends, industrial leasing volume is still strong with many key markets experiencing solid positive net absorption. If volume continues to hold at these levels, we may see some levelling off of rental rates as the market adjusts to the new normal.
Land sales activity remains subdued, with prices stabilizing at lower levels after the impact of interest rate hikes in 2022 and 2023. Developers remain cautious, largely holding back on new acquisitions as they wait for more favorable economic conditions. Most land transactions are being completed by owner users looking to build their own space and who are willing to pay premium prices for zoned, serviced land.
Investor sentiment has shown gradual improvement as interest rates began easing earlier in the year. While transaction volumes remain moderate, the focus has shifted to assets with solid fundamentals in resilient sectors such as industrial and multifamily. The slight increase in office leasing may also signal emerging opportunities in select office markets for strategic investors.
As we enter 2025, there is cautious optimism in the market. Continued monetary easing and economic stabilization are expected to stimulate activity across sectors. Strategic players who capitalize on these changes and embrace innovative approaches are well-positioned to thrive in the evolving commercial real estate landscape.
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