After a construction bottleneck for most of 2019, JLL’s Toronto Industrial Insight – Q4 2019 report says over 6.2 million square feet of new industrial space was completed in Greater Toronto.
According to the report, this brings 2019 total completions to 7.6 million square feet. Among these new completions are DSV’s almost 1.1 million square foot facility in Milton, Amazon’s 1.0 million square foot facility in Caledon, UPS’ 847,302 square foot Caledon facility and One Properties’ 823,514 square foot project at 2233 Sheppard Avenue West.
JLL states that tenants will be impacted little as the construction completions this quarter were 93.5 per cent pre-leased upon delivery. The real estate service company forecasts a modest increase in options in 2020.
Under construction product currently has a 63.0 per cent pre-lease rate, which is down from 85.8 per cent earlier this year and could lead to a modest rise in vacancy and availability in 2020.
On the leasing front, the report reveals DSV leased almost 1.1 million square feet in a sale leaseback with GWL at 2200 Yukon Court. Additionally, Bombardier completed a 38 acre land lease with the Greater Toronto Airports Authority to build a 1.0 million square foot Aircraft Assembly facility near Pearson Airport by 2023.
Total industrial sales capped off the year on a strong note with the highest volume seen this year at $1,157.5 million, while price per square foot reached new highs hitting $220. Dollar volume was aided by GWL’s purchase of DSV’s Milton facility for $180.1 million, the largest industrial sale of the year.
Looking into 2020, JLL anticipates tight market conditions and rising rents. Vacancy is expected to trend upward slightly as 12.0 million square feet of new supply and slightly lower pre-lease rates are expected in 2020.
JLL also forecasts vacancy to stay below 2.0 per cent while rental rates climb, but at a slower rate than what was witnessed in 2019.