Back Like We Never Left

Welcome back! This year is going to be big. Can you feel it? Let's dive in.

January 16th, 2024

Read Time: 3 minutes

Can you feel it? The optimism percolating?

The palpable energy brought on by falling interest rates?

And... Dare I say... momentum?

Well, yes and no.

We held our monthly sales call last week. 30 investment brokers from across Ontario discussing exactly this.

Below are my biggest takeaways from the meeting.

But first - I'd like to express our team's gratitude for the incredible year we had in 2023!

(did someone forward you this email? Sign up [here](http://www.onmultifamily.com)).

2023 Highlights

Thank you for trusting us with your business

I'm extremely proud of what we were able to accomplish in 2023. To our clients - thank you for trusting us to execute. Also, a huge thank you to Zoe Prachter on our team who ensured we never dropped the ball.

For those who haven't tried us out yet - we would love to work with you. Call 647-915-3193 to find out why we're Ontario's fastest-growing multifamily team.

Market Sentiment & The Year Ahead

Broadly speaking - 3 themes emerged from the sales meeting. Bear in mind this discussion was about all asset classes, not just multifamily which is among the most resilient (retail, development land, office, industrial etc.).

1/ Insolvency's Abound for Residential Land

Our development teams have been seeing a TON of receivership activity. Insolvency Insider captures this well. Lender patience is waning in the residential land sector. The year may start with significant insolvency activity but could slow down later. Real estate, construction services, traditional retail, and hospitality are expected to face significant stress.

2/ Cautious Optimism for 2024

Looking at 2023 - activity was down considerably in all asset classes. To use Toronto multifamily as an example - sales were down 51.2% in 2023 year-over-year (volume decreased from $2.3B in 2022 to $1.1Bn in 2023).

Rising interest rates put many large institutional players on defence. Now - with inflation seemingly tempered and both the BoC and the Fed set to lower rates - most feel activity will (gradually) resume.

3/ Trends From 2023 Continue

In 2023 we saw several trends emerge. Vendor financing became more common, portfolios were split up to be sold, private buyers and non-profits became a bigger percentage of the buyer pool, and new builds were a hot commodity. Many of these trends will continue and become more pronounced in 2024.

Closing Thoughts

There is no consensus on exactly where the market is. The bulls argue that we hit the floor already, and as rates decrease activity and cap rates will start returning to their 2021 levels. The bears would argue that cap rate have not climbed nearly enough to compensate for where interest rates will land. They predict a much more tempered path forward.

With that in mind - now is the time for a lot of conversations. For sellers looking for the right time - test the waters. For purchasers unsure of where cap rates will settle - throw a ton of offers. In this market - activity will pay off.

Lastly - a couple of quick housekeeping notes: 1) We're releasing our year-end multifamily report soon. Please keep an eye out. 2) Our team is currently on a Q1 roadshow sharing our market update with as many folks as we can. Please reach out to our team - we would love to come by your office to share ideas and find a way to win together.

Thanks for reading.

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