Finance Commercial Real Estate in Toronto

Published on 29 August 2022, 07:22:56 AM

Your timing couldn’t get better for investing in commercial real estate in Toronto, market analysts say. 

What’s Up With Commercial Real Estate in Toronto

• Commercial real estate in Canada is on an upswing, and should reach pre-pandemic levels. Growth in multi-residential investment properties in Toronto is only “constrained” by a limited supply, Avison Young confirms. 
• Top contenders for GTA real estate investors are warehouses and fulfillment centres, rental units, and health care or life science complexes, Emerging Trends in Real Estate 2022, from PriceWaterhouseCoopers (PwC) and the Urban Land Institute, confirms.
• Like other pollsters, PwC found Canadian workers (36% of respondents) want hybrid work arrangements. The willingness to balance remote work with in-office hours depends on having safe, healthy workspaces. Opportunity abounds for investors holding commercial real estate in Toronto to create office configurations that attract hybrid, millennial workers and pre-retirement baby boomers. Plexiglass cubes and EV chargers anyone? 
• Buying commercial real estate in Toronto close to retail centres can give investors the extra edge, as businesses improve their “last-mile delivery” (how long it takes products to arrive).
• Pandemic-taxed shoppers are hungry for retail experiences once again. Siting retail space with condos or multi-family rentals improves foot traffic, the PwC-Urban Land Institute report stresses.

Make property title transfers in Ontario. 

Must-Knows About Commercial Real Estate in Toronto

We answer the 4 most common questions about investing in commercial real estate in Toronto.

1. How can I buy commercial property in Canada and finance it?

Any commercial realtor can help you find mortgageable properties in Canada or Toronto. Six types of commercial real estate in Toronto qualify for mortgages:

1. Single family homes, duplexes, triplexes, or fourplexes bought as investments.
2. Rooming houses or apartments with five or more residential units.
3. Residential commercial mixed property, like a mom and pop convenience store with rental units above it.
4. Office space.
5. Retail properties.
6. Industrial buildings such as warehouses.

Commercial real estate in Toronto can be mortgaged for up to 85% of its fair market value. Borrowing for investment property mortgages is based on your personal financial history, and projected cash flows. CMHC insurance is available for rental buildings with five or more units that use at least 70% of the floor area and loan for housing.  

Get started today by checking if you qualify for federal small business loans.  

2. How much does it cost to buy office space in Toronto?

Given average commercial rents in Toronto, buying office space can make sense for business owners of any size. But global thirst for capital assets could push out smaller investors if overheated commercial real estate in Toronto makes yields unwieldy, the PwC-Urban Land Institute report points out.

Rates of return on investment, development decisions, and affordability are at the mercy of construction, labour, and land costs. Supply chain issues have metals like aluminium, copper, and steel tied up in transit.

Average commercial rents in Toronto were trending around $6,000 for 185 m² in March 2022, down to $250 for an enclosed 7.98 m² office for one. The cost of buying office space in Toronto  started at $148,888 for 111 m² in North York. It topped out at $44 million for a new 4,543 m²  commercial condo at King and Spadina.

Go online to find private lenders for commercial real estate, or Government of Canada programs for income property owners.

Buying commercial property in Ontario? Qualify for CMHC financing. 

3. Can I live in a commercial property in Toronto?

You can, but look before you leap.

• Commercial mortgages can be used for residential property bought for investment purposes. 
• They are riskier than loans for owner-occupied homes, but cheaper than construction loans.
• Interest rates are higher than for residential mortgages.
• Some commercial mortgages require balloon payments, or lump sum contributions. 
• CMHC commercial mortgages may be amortized over up to 40 years.

Ask an accountant or tax advisor before you invest. They can give you a better idea if investing in commercial property in Toronto is right for your long-term financial objectives.

Buying a commercial building for investment income. 

4. Can I get an HST rebate in Ontario?

HST (harmonized sales tax) is charged on sales of commercial real estate in Ontario, but some property types and uses are exempt. Learn more about Canada Revenue Agency rules. Talk to a commercial real estate advisor or tax accountant if you’re uncertain how your sale is affected by the HST. 

Read the PwC-Urban Land Institute report. Download here. 

Find a Lawyer in Toronto for Commercial Real Estate

Axess Law’s lawyers in Toronto and area review your offer to purchase for commercial real estate, and advise you if amendments are recommended. We liaise with your private lender or banker for instructions on finalizing commercial mortgages. 

Our virtual real estate lawyers connect with you via remote video conferencing technology when you’re out of town, but need to meet obligatory completion dates to prevent an offer to purchase from falling through. Axess Law uses secure, confidential virtual software that lets you sign documents online. We email you a copy for your records.  

When you can’t meet in person, close real estate deals remotely. 

Axess Law has affordable virtual real estate lawyers throughout Ontario anytime you need to search property titles for easements, rights of way, construction liens, or financial claims. We register and transfer title to commercial real estate you purchase or sell. 

Agreement need revising due to new information you receive from a property inspection, final walk through, or commercial mortgage lender? Axess Law negotiates with the buyer’s or seller’s lawyers to amend your offer to purchase.

Everyday Flat Rates for Legal Services 

Our flat fee legal rates are affordable, and all inclusive (excluding taxes, disbursements, or third party charges). You receive an itemized statement of adjustments on the completion date. We explain all the fees, disbursements, and legal charges, and answer any questions you may have.

Make Appointments Quickly and Conveniently 

Making appointments takes just minutes with our easy to use, online booking form. Remote video conference calls can be scheduled 7 days a week, at times that fit your schedule. Just ask us. 

Dial our 647-479-0118 lawyer line in Greater Toronto Area, or toll free to 1-877-402-4277. We have onsite parking at our Greater Toronto Area and Ottawa law offices, and easy transit access.