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‘Upward Momentum By Q3’: Toronto Broker Expects Signs Of CRE Improvement In 2024

Spear foresees more opportunities for light industrial development in the GTA in 2024.

Mirabelli Corp. is a long-time builder, developer and property manager of light industrial and other types of commercial real estate throughout North America. When a potential project arises in the Greater Toronto Area, Mirabelli Corp.’s home base, Chief Operating Officer Adrian Mirabelli knows who to call. 

“We've worked with Diana Hoang, managing director of brokerage Spear Realty, for several years,” he said. “The reason we work with her and Spear is because of their fair, level-headed approach.”

Hoang, a 15-year veteran of the GTA’s commercial real estate scene, understands the importance of keeping a level head in a year like 2023, which was marked by many investors taking a cautious approach to acquisitions and dispositions, she said. 

In the worst case, some overleveraged players were forced into receivership last year. At the other end of the spectrum, some companies took advantage of the situation to merge with former rivals or restructure their operations, which Hoang said opens new opportunities for her business.

“The restructurings and other changes last year meant people were moving or changing positions,” she said. “This creates opportunities for Spear agents to build new relationships with people who they were not able to access previously.”

After the turbulence of 2023, Hoang sees reasons for optimism in the new year, she said. 

For one thing, buyers are feeling more confident as they navigate the debt sector. On the leasing front, Hoang predicted adjustments in lease rates as well as longer absorption time on vacancies. 

Hoang said Spear observed a 50% drop in transactions from 2021 to 2023 while the market was in a holding pattern. That trend has continued into the first quarter of 2024 with sale prices that are lower by 18% to 20% from previous years. 

However, activity this year is picking up with new listings and purchase offers circulating in the market, Hoang said.

“We expect to see an upward momentum by Q3 with more transactions this year than in 2023, when approximately 3,500 deals valued at nearly $30B were transacted across all asset classes in the GTA,”  she said.

While the market continues to work its way through these adjustments, Hoang recommended that clients diversify their portfolios. To help them, Spear provides its own expertise and market insights while also connecting clients with other experts to help them branch out into new asset classes.

“We’re proud of our collaboration with associates in the industry, and we seek colleagues with specific expertise to assist clients with their new ventures,” she said. “In addition to diversification, collaboration is one of our main pieces of advice for our clients and peers.”

Mirabelli Corp. has taken that advice to heart and has been expanding its portfolio of purpose-built rental properties in the GTA, a sector that Mirabelli said has great long-term potential.  

“We see the turbulence in the market as a normal shakeout with money having been too cheap for too long,” he said. “We’re long-term players and we are long on the real estate market in the GTA. We believe there are now generational opportunities and great entry points into multifamily residential.”

Mirabelli added that light industrial remains an appealing long-term investment as well. Property values have proven resistant during this period of higher interest rates, primarily because of the lack of supply in the market, he said.

Although Hoang counsels diversification, light industrial remains Spear’s preferred asset class. In Q4 2023, GTA industrial transactions reached nearly $2.3B, the highest figure since Q3 2021, according to data by Altus Group.

She said the firm has been working with Mirabelli Corp. on its property at 120 Norfinch Drive in Toronto, where it is helping to both sell and lease individual units depending on a tenant’s preferences. 

Mirabelli praised Spear’s ability to pivot from sale to leasing, a flexibility that helps it and other Spear clients roll with changes in tenant behavior.

“As a developer, you have to play the game as it is and as it will be,” he said. “Whereas two years ago you might have been selling real estate and attaining great value, now you are leasing and attaining great value. Spear has helped us with this because they are an incredible woman-owned business and Diana has an incredible team.”

While women are still underrepresented in CRE, particularly in leadership roles, Hoang has seen progress made during her time in the industry. 

“There can still be preconceived notions about our capabilities as women from both male and female clients, where it might be falsely assumed that we cannot be as aggressive on doing transactions as men,” she said. “I think Spear’s experience proves that is not accurate. Fortunately, I have had great support from the industry and from my family.”

This article was produced in collaboration between Spear Realty and Studio B. Bisnow news staff was not involved in the production of this content.

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