In its Industrial Real Estate Market Research study, Newmark Knight Frank Devencore reported that availability rates in the Greater Toronto Area’s dynamic industrial market have dropped to 3.4 per cent, a historic low.
This low availability rate has been reached despite the 3.3 million square feet of new inventory that was delivered to the GTA industrial marketplace over the past six months. Year over year, the total inventory of industrial space has increased by over 8 million square feet. Average asking gross rents have also increased over the past year by just over eight per cent and are currently at approximately $10.55/sq.ft.
“Momentum remains strong across the GTA and, in particular, Toronto West, the GTA’s largest industrial submarket,” said Rob Renaud, Managing Principal/Broker of Record at Newmark Knight Frank Devencore’s Toronto West office. “Demand is significant in Mississauga because it is ideally situated at the crossroads of most of the GTA’s major transportation routes and because of its inventory of modern industrial space. Locating larger blocks of space is a challenge here, and those that do become available are usually leased or purchased quickly.”
The Newmark Knight Frank Devencore study notes that total available rates in the overall GTA industrial market over the next year will be strongly influenced by whatever activity may take place in specific Toronto West regions such as Milton, Caledon and Halton Hills, all of which have an available inventory of industrial space that is substantially higher than the GTA average. Over 4 million square feet of space has been recently delivered or is under construction in the Milton/Halton Hills area.
“Looking ahead, with approximately 5.6 million square feet currently under construction, industrial tenants will have many options,” Mr. Renaud said. “However, there are fewer major speculative developments currently being planned, which may lead to a further tightening of the market. Additionally, the recent U.S. elections could have a negative impact on the industrial marketplace going forward, especially if NAFTA is renegotiated and the Trans-Pacific Partnership agreement is abandoned as stated by the incoming US administration. Should interest rates also creep upward, the GTA’s manufacturing and distribution economy could continue to face additional challenges.”
To read the complete market study, click here.