2024 Year in Review
Capital Markets, Real Estate, Politics, and M&A
In the news
Bank of Canada cuts interest rate to 2.75% as country faces 'new crisis' from tariffs
Bank of Canada governor Tiff Macklem said the economy started the year strong, with solid GDP growth and inflation within its two per cent target.
But tariff uncertainty caused by the on-again, off-again trade war between Canada and the U.S. has weighed on business spending and hiring, and shaken consumer confidence, he said. Manufacturing businesses in particular have lowered their sales outlooks.
Trump’s tariff threats keep changing. We’re tracking what’s on, what’s on pause and what’s coming
A 25 per cent tariff on Canadian steel, aluminum, and many products made with those metals, which took effect on March 12. This could stack on top of any other tariffs Trump levies on Canadian goods, such as cars and car parts. Everything else has only been threatened.
Europe retaliates against Trump’s tariffs, puts levies on American alcohol, motorcycles and meat exports
The announcement marks a massive escalation in the transatlantic – and global – trade war since Mr. Trump returned to the White House in January. The new EU tariffs will target American-made steel and aluminum products, industrial goods, home appliances, textiles and agricultural goods such as poultry and beef. The EU will also reinstate measures that were introduced in Mr. Trump’s first term, including tariffs on bourbon whiskey, cosmetics, Harley-Davidson motorcycles and jeans.
Canada’s home building industry says tariff chaos will slow new investment
“There was a lot of good sentiment heading into this year,” said Steve Keyzer, an executive vice-president with Colliers Canada who leads the firm’s housing redevelopment advisory team for the Toronto region.
But Mr. Keyzer said that has changed and investors have pulled back. “If this goes on for a long time and tariffs do come into effect for the medium term, then we’re going to see less confidence in all aspects of investment in the economy, and definitely, housing will be affected.”
The Rundown
Equity Markets Performance
TSX & CAD Overview 2024
USD and NASDAQ overview 2024
REIT Performance 2024
North American Mergers and Acquisitions
Johnson & Johnson acquired Shockwave Medical for $17 billion, strengthening its position in the healthcare industry.
Capital Markets Trends
-1-
Mid-market M&A remained resilient, with 84% of private equity deals valued below $25 million
-2-
Private equity firms prepared for increased competition with strategic buyers, armed with $2.6 trillion in global dry powder at the end of 2023
-3-
Canadian real estate investment volumes were forecast to rise modestly in 2024, with potential upside from merger and acquisition activity
Fixed Income Markets
All major fixed income asset classes posted strong gains in Q3 as investors anticipated monetary policy normalization
Emerging Market Debt (+8.1%) and International Fixed Income (+7.0%) outperformed as local currencies strengthened against the U.S. dollar
downtown
Several factors contributed to the high office vacancy rates in downtown Toronto in 2024
- Fluctuations in the technology sector, including layoffs and restructuring, have contributed to lower demand for office space, increasing vacancy rates in Toronto.
- Industries like tech, advertising, and insurance, which are more suited to hybrid work arrangements, have reduced their office space requirements, further exacerbating the vacancy trend.
- Some new office buildings are set for delivery in 2025, which could lead to a further increase in vacancy in the city.
growth
New suburban corporate hubs played a significant role in contributing to downtown Toronto's high office vacancy rates
Emerging suburban centers, like the Vaughan Metropolitan Centre, have become competitive alternatives to downtown Toronto by attracting tenants. These suburban hubs are well-connected to regional and local transit systems, offering accessible office options outside the city core.
- Rising Popularity of Suburban Business Districts: Areas like Vaughan Metropolitan Centre are becoming strong alternatives to downtown Toronto.
- Parking & Transit Accessibility: Suburban districts offer ample parking and are well-connected to regional and local transit networks.
- Proximity to Residential Communities: Growing suburban populations provide shorter commutes for employees, making these locations more attractive.
- Lower Vacancy Rates: Suburban office markets have historically had lower vacancy rates (e.g., 12% in mid-2023 vs. 15% downtown).
- Demographic Shifts: A growing 25-44 age group, especially families, is driving demand for suburban office space.
Colliers
Year in Review
Top Sales
522 University Avenue,
Toronto, Ontario, Canada
Buyer: University Health Network
$79,250,000
2000 Argentia Road,
Mississauga, Ontario, Canada
Buyer: 2000 Argentia Holding Corp.
$40,100,000
1900 & 1908 Ironoak Way,
Oakville, Ontario, Canada
Buyer: University Health Network
$35,250,000
Top Leases
700 University Avenue,
Toronto, Ontario, Canada
Buyer: Sinai Health System
$48,282,207
130 King Street West,
Toronto, Ontario, Canada
Buyer: Canoe Financial Corp.
$13,444,992
175 Bloor Street East,
Toronto, Ontario, Canada
Buyer: National Payroll Institute
$13,190,932
Top Landlords by Square Footage
8.8M
6.4M
6.0M
4.2M
3.2M
4.3M
2.1M
1.4M
1.3M
Reach out to connect with one of our advisors to learn how we can help find your next office space
key deals
Canadian Mergers and Acquisitions in 2024:
Key Highlights
M&A activity surged in 2024, rebounding strongly with $72 billion in deals by May. The materials sector led the way, driving nearly half of transactions, followed by financial services and tech, highlighting broad-based growth.
Tech Sector Growth
The technology industry thrived as companies prioritized acquisitions of AI-driven businesses, underscoring a vibrant and forward-looking M&A landscape.
Financial Services Surge
The financial services sector achieved remarkable growth, with M&A deal values skyrocketing by 817% in Q3, reflecting renewed confidence and substantial opportunities.
Strategic Bank Merger
National Bank’s strategic acquisition of Canadian Western Bank in a C$5 billion share-swap deal promises enhanced services and expanded offerings nationwide.
Energy Sector Optimization
Chevron’s $6.5 billion asset sale to Canadian Natural Resources demonstrates a proactive strategy to optimize portfolios and fuel growth in the energy sector.
Sustainable Coal Acquisition
Glencore’s $6.93 billion acquisition of Teck’s coal unit, approved with conditions to preserve jobs and local involvement, highlights a balanced approach to growth and community impact.
Key deals in 2024 include CI Financials’ $4.7 billion sale to Mubadala Investment Co, and National Bank of Canada’s $5 billion acquisition of Canadian Western Bank in the financial sector. In energy, Enerplus Corp merged with Chord Energy Corp for $5.1 billion, while Tourmaline Oil acquired Bonavista Energy. The mining sector saw significant consolidation, with Stelco selling for $3.5 billion to Cleveland-Cliffs and Osisko Mining being acquired by Gold Fields for $1.8 billion.
Middle-market M&A activity remained strong in 2024, particularly in materials, industrials, and technology. In Q3 alone, around 370 deals were completed, with the materials sector leading with approximately 100 transactions.
Key Drivers
The Bank of Canada’s reductions in interest rates in July and September enhanced funding conditions, while Canadian firms pursued global prospects, and foreign investors showed increased interest in Canadian assets, especially in the mining and energy sectors.
Challenges
Disagreements on valuations between buyers and sellers emerged due to market volatility and inflationary pressures.
Outlook
The final quarters of 2024 brought some eagerly anticipated milestones to the mergers and acquisitions landscape. While the full impact of reduced interest rates in Canada and the U.S. may take time to materialize, borrowing costs are undeniably trending favorably. Transaction professionals are expected to maintain their innovative approaches to navigating persistent challenges, such as discrepancies in valuations and perceived risks. The closing quarter of the year will reveal whether the upward trajectory in deal activity persists. Overall, the environment for heightened M&A activity in Canada became noticeably more favorable during Q3 2024. With inflation easing, further interest rate reductions, and abundant private equity funds, momentum is anticipated to carry into 2025, with mining, financial services, and technology remaining key focal points.
predictions
Based on the search results, several key factors are expected to shape Toronto's office market in 2025
1
Vacancy rates
Office vacancy rates are projected to peak in early 2025, with signs of increasing market confidence and occupiers returning to a growth mindset. The national office vacancy rate is expected to reach 15% by the end of Q2 2025
2
Supply and demand
- New supply is expected to slow down significantly. Construction levels have dipped to a 20-year low, with the final tranche of deliveries expected in 2025
- This reduction in new supply is anticipated to result in a long-term undersupply of modern, amenity-rich spaces needed by office tenants
- The development pipeline is shrinking, with just 10.9 million sq. ft. of office space currently under construction across Canada, a six-year low
3
Return to work trend
- More workplaces are returning to full-time in-person work, which could increase demand for office space
- High-quality offices in lively locations are expected to draw tenants and tighten vacancies
4
Employment rates
- Toronto's unemployment rate reached 8.1% in late 2024, the highest since the COVID-19 pandemic
- The influx of immigrants to Toronto is expected to continue impacting the labor market, potentially affecting office demand
5
Capital markets
- Interest rate cuts anticipated in 2024 are expected to improve financing conditions, potentially boosting office real estate transactions
6
Political factors
- While not explicitly mentioned for 2025, government policies on immigration and economic growth will likely continue to influence the office market indirectly
summary
In 2024, Canada’s real estate market showed signs of recovery, with housing stabilizing and affordability gradually improving. Office demand evolved with hybrid work trends, while industrial and suburban spaces flourished. Financial markets demonstrated resilience, supported by the Bank of Canada’s balanced approach to interest rates and inflation, with the TSX performing steadily despite global uncertainties.
Jonathan Olynick
Senior Managing Director
Jonathan.Olynick@colliers.com
+1 416 620 6107
Jack Harold
Senior Research Analyst
Jack.Harold@colliers.com
+1 437 253 8186
Clifton Narcis
Manager, Marketing Studio
Clifton.Narcis@colliers.com
+1 416 620 2354
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