Increase In Industrial Space Availability
Industrial rent prices are on the rise across the Greater Toronto Area despite a steep rise in vacancy. The trend has been around since the pandemic, and it doesn’t appear likely to be vanishing anytime soon. The further dip in demand for industrial space across GTA means the industrial rent is on the rise.
What Do The Numbers Suggest?
A new report rolled out by Avison Young suggests the overall industrial availability rate across the GTA experienced a hike by 30 basis points in Q3 of 2023 to 2.2%. This is the highest rate on record since the 2.5% of 2018’s Q1. The numbers mean the vacancy rate is at the highest since 2020 at 1.3%.
Cities with the highest availability rate include Brampton at 4.5%, followed by Caledon at 4.1%. Meanwhile, the availability rate in Oshawa and Aurora stood at 0.5% in contrast to the 2.9% in Toronto.
The little demand observed revolved around logistics and distribution including Pepsi’s new 570,000-sq.-ft lease agreement in the city of Milton, and Lactalis Canada’s 380,000-sq.-ft deal for a purpose-built facility in Whitby.
GTA’s average net rental rate reached $18.38 psf in Q3 which is a 14% annual rise and a three-year jump of 88%. Simply put, the industrial rents have shot up by over 153% across the GTA in just a matter of five years.
New Industrial Construction To Be Put On Hold?
The trend has a direct bearing on new constructions expected to take place across GTA. Pointing out the same, the real estate company mentions, “New construction starts are expected to slow in the coming quarters as some landlords and developers are being more cautious and plan to pause on starting new projects until current projects are fully completed… New construction starts may be further constricted if availability rises rapidly.”
