Warehouse Boom Continues, Industrial Sector Poised for Further Growth in 2019

The industrial market continues to be driven by transportation, warehousing, distribution, and e-commerce. 

As a result, approximately 6.5 million SF of new buildings was added to the inventory, while more than 8 million SF (in over 30 buildings) is still under construction, most of which have been leased prior to completion. 

As Amazon continues its retail expansion, it will require more and more space to satisfy consumers’ appetite for (almost) immediate delivery. As such, in late 2018, two new buildings were announced – one in Caledon and another in Ottawa – each one million SF in size. They are now under construction.

 

The Amazon Effect:

(Six facilities in Ontario – four existing and two under construction)

12724 Coleraine Drive, Caledon – Site Plan

 

Due to the very low supply and inability to keep pace with growing demand, we have seen an accelerating increase in net rental rates. Larger properties saw increases from $5.50 and $6.50 net per SF to mid- to high- $7.00 per SF over the past year. 

The question is, how quickly will we be breaking into double digits and catch up with other comparable markets?

The manufacturing sector, on the other hand, has experienced further job losses. 

Bombardier’s sale of its Downsview facility and the announced closing of GM’s plant in Oshawa are just a few of the many lost manufacturing facilities. This sector continues to face hardships, due to many factors but mainly due to: high tax rates, high energy costs and low levels of productivity. 

 

GREATER TORONTO AREA – TEN LARGEST INDUSTRIAL LEASE TRANSACTIONS IN 2018

Canadian Tire Distribution Centre

 

2018’s ten largest industrial lease transactions accounted for a total of 6,585,674 SF of space, representing almost 10 percent of the overall inventory of industrial product in the Greater Toronto Area. 

All of these are driven by e-commerce and logistics.

And all except two (9501 Hwy #50 in Vaughan and 6757 Northwest Drive in Mississauga) are new construction.

 

GREATER TORONTO AREA – TEN LARGEST BUILDING COMPLETIONS IN 2018

Three out of ten largest building completions in 2018 were in the City of Vaughan (GTA North), while the rest were completed in Halton Hills and Mississauga (GTA West). 

Half of the properties were between 200,000 – 300,000 SF (two of which were additions to existing facilities), two buildings were in the 300’s, two were in the 400’s, and one was considerably larger at 770,000 SF.

To be continued with an overview of industrial investment sales and industrial land sales across the GTA…

Goran Brelih and his team have been servicing Investors and Occupiers of Industrial properties in Toronto Central and Toronto North markets for the past 25 years.

For more information on GTA Industrial Real Estate Market or to discuss how they can assist you with your real estate needs please contact Goran at 416-756-5456, email at goran.brelih@cushwake.com, or visit www.goranbrelih.com.

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