Are you thinking about investing in commercial real estate any time soon? Or are you still trying to figure out how real estate works? No matter which side you’re on, we’re here to help you. With a constantly growing property market, Toronto is one of the cities you want to invest in. Without a mistake. So if this thought crossed your mind, here is a guide to Toronto commercial real estate investment. We’ll try to keep it simple. And you can always consult professionals in this area for any extra questions.
Welcome to Toronto
Toronto is the largest city in Canada and the fifth-largest city in North America. A large number of immigrants has made Toronto one of the biggest and most multicultural communities in the world. It is also a world leader in areas such as technology, finance, business, entertainment, and culture. And this partially answers our next question.
Why invest in commercial real estate in Toronto?
Toronto is a prosperous city that attracts investors and companies from all over the world. And in various fields of interest, mostly drawn by the market’s growth potential and stability, despite some changes it faces sometimes. And, according to the predictions of Canada Mortgage and Housing Corporation (CMHC), this city has a promising future in the real estate market.
Commercial real estate investment for dummies
Commercial real estate investment is a strategy mostly used by small companies’ owners and experienced investors. And you have to keep in mind that, whatever you know about residential real estate, probably won’t apply in this area. Commercial real estates are usually more expensive than residential ones but justified. They have the potential to generate more cash flow.
Good return on CRE is usually slightly above 15% per year. An average return on investment (ROI) varies depending on the type of the property, purchase price, and location, but is generally more than 10%. Investors in CRE normally earn their money through cash flow, revenue, rental income, or appreciation.
Guide to Toronto commercial real estate investment
Commercial real estate property can vary widely. There are four types of CRE according to their use:
Office
Consists of real estate used for office buildings. Skyscrapers and high-rises in urban areas, and office parks and mid-rises in suburban areas. Space can vary in size and style, and the lease terms are often longer – five to ten years.
Industrial
Used for industrial business operations. This includes warehouses, assembly, heavy manufacturing, and research and development buildings. These properties aren’t located in residential areas, due to zoning regulations that apply to their industrial business operations. The lease agreement length is five years and more.
Multifamily
These properties offer residential housing in exchange for monthly rent and present a worthy Toronto commercial real estate investment. Apartment buildings, apartment communities, townhomes, and co-operative are considered multi-family real estate (size and number of units may vary). The lease agreement is flexible in terms of duration. It can be short-term and long-term, though usually, it’s no longer than a year.
Retail
Includes properties that provide the space required for retail business. This type of CRE can be developed in shopping malls, strip malls, factory outlets, and other shopping centers. Similar to multifamily properties, the lease agreement is somewhat shorter – mid to long-therm or 4-5 years.
These categories can further be classified as A, B, or C, depending on space’s aesthetic, age, price, and location. If you’re still thinking about coming to Toronto, and invest, check moverstoronto.com for advice and help with relocating to this real estate market heaven.
List of commercial real estate properties
So, we’ve explained the basics. The next thing is finding a list of CRE. And there is more than just one way to do that:
- Find a reliable Real Estate Agent to help you out
- Consult Real Estate Listings
- Approach owners directly
- Real Estate Investment Clubs (REI)
- Ask friends and family.
Did you find the right one?
After talking to the owners, going through the listings, you’ve found several possible options. But which Toronto commercial real estate investment is the best for you? There are several questions you should ask yourself:
- Does it meet your objectives and expectations? – find out how much it’s going to cost you and how much you’ll be able to get back
- Is the vacancy rate rising or is it constant? – choose locations with a low, stable, or dropping vacancy rate
- Does your investment consultant agree with your choice? – whatever your objective, an investment consultant will make sure that you are maximizing the potential your investment has
Get down to business
Now that you’ve finally found a commercial real estate investment that suits you best, it is time to start looking for capital. Can you finance it on your own? If so, you’re one of the lucky ones. If you can’t, consider looking for a commercial mortgage.
In Toronto, apartments, plazas, offices, malls, recreational properties, all fit into a commercial real estate category. This process may take a little bit longer, not like residential mortgages. And one more thing – stay away from failing businesses.
Move, move, move
A commercial move can be very stressful, which can lead to errors and you don’t want that at the very beginning of your office move to another city or state. So why not hire help? A trained crew is the best assistance for everything you need. Time is money, and you don’t want any problems that will prolong your relocation.
You don’t have to do this a-loan
A commercial real estate investment can be slow, and exhausting. High renovation costs, but on the other hand stable cash flows from long-term tenants. It surely does have its pros and cons, but so does any investment. If you’re still not sure whether you should move to Toronto or not, we suggest you make your own list of pros and cons. It could be a great experience, just think about it. And we sincerely hope that our guide to Toronto commercial real estate investment will come in handy when writing down your pros.