GTA Industrial Real Estate Market Overview – Part 1
When examining the changes in the Greater Toronto Area over the past decade, it’s amazing to see how much our City has transformed into a global metropolis, with a diverse and thriving labour force, a hub for a multitude of sectors (such as technology and finance), and hundreds (or thousands) of new developments; from mega-high-rises to state-of-the-art Industrial facilities and even Google’s ‘Neighbourhood of the Future.’
We can expect this environment to attract investment into all asset classes and neighbourhoods from Investors and Occupiers in all major industry verticals.
Looking back at 2019, specifically, it’s clear that the GTA’s Industrial Market has benefited from the positive upward spiral being created by these forces.
As discussed in our previous newsletter, strong fundamentals coupled with a lack of (or insufficiently growing) supply have pushed up rental rates and signaled to developers that the necessary Demand is there; if one could just bypass or expedite the planning process with the Municipalities. Therefore, we expect to see a tight market for the foreseeable future, yet assets will continue to trade (something we will touch on in our next issue).
For today, however, let’s examine the Top Ten Largest Industrial Developments and Land Sales in the Greater Toronto Area in 2019.
These particular projects and transactions are important because, typically, they are orchestrated by the most sophisticated and capable Developers working in tandem with high creditworthy Users to construct their new, pre-leased facilities.
Because of the boom in e-commerce and the resulting demand for warehousing, distribution, and fulfillment centres… and said lack of space… these Occupiers have been forced to build or pre-lease.
Looking forward to 2020 and beyond, this story will evolve into not just more of the same as it relates to purchasing and developing industrial sites and rural greenfield land… but also into more acquisitions of older buildings ready to be demolished to create new, urban infill sites.
2019 GTA TOP TEN INDUSTRIAL DEVELOPMENT PROJECTS
1. 10254 Hurontario Street, Brampton – Canadian Tire
Panattoni Development Company recently held a groundbreaking ceremony to launch this 1.3 million square foot industrial development, a national distribution centre for Canadian Tire Corporation. The project will bring approximately 600 jobs to Brampton.
Located on Hurontario Street north of Bovaird Drive, this state-of-the-art facility will feature a 40-foot clear height, together with a first-class office space component. The construction of this facility will take approximately a year and a half and it is scheduled to open in 2022.
In the spring of last year, Panattoni Development Company won a prestigious REX Award for Industrial Lease of the Year for this development.
10254 Hurontario Street, Brampton – Source: NAIOP
2. 2200 Yukon Court, Milton – DSV
Built by Leeswood Construction, DSV’s 1,100,000 SF state-of-the-art brand new logistics centre with Head Office in Milton is scheduled for completion this quarter. DSV Canada is consolidating its Air & Sea, Road, and Solutions divisions under one roof. This is the largest facility of its kind in the DSV network worldwide, in over 80 countries. About 800 employees will be working on this site.
2200 Yukon Court, Milton – Source: DSV
3. 12724 Coleraine Drive, Caledon – Amazon
Amazon announced the partial occupancy of this new, 1,021,611 SF state-of-the-art distribution centre in Caledon, built by TriAxis Construction Limited; creating 800 new jobs in the process.
Known as Amazon DCYYZ7, this property comes with 40′ clear height, 70′ marshaling bay and more than 100 truck-level doors. The 430 parking spots and 264 trailer positions provide ample parking.
It is located in Bolton on the west side of Coleraine Drive and south of Healey Road.
12724 Coleraine Drive, Bolton – Source: Blackwood Partners
4. 6351 Steeles Avenue East, Toronto – Amazon
Under Construction by Broccolini (and known as Amazon DCYYZ9), this new state-of-the-art fulfillment centre located at 6351 Steeles Avenue East, Scarborough will have a surface area of 1 million square feet and will create more than 600 full-time jobs. Upon completion, this new robotics facility will be used to pick, pack, and ship small items to customers.
Construction of the Scarborough Amazon fulfillment centre began in August 2019, with Amazon’s scheduled move-in date slated for August 30th, 2020.
6351 Steeles Avenue East, Toronto – Source: Urban Toronto
5. 2235 Sheppard Ave West, Toronto – TTC & Riverside Natural Foods
This 925,000 SF development replaced the old Eaton’s warehouse building and was fully-leased to the TTC and Riverside Natural Foods prior to completion.
2233 Sheppard Avenue East, Toronto – Source: Urban Toronto
6. 12424 Dixie Road, Caledon – UPS
According to a release from UPS (United Parcel Service) Canada, construction of a $200 million, 850,000 square foot advanced scanning and sorting facility is underway in Caledon. The small package operations hub will provide UPS with additional processing and service capacity to the GTA. Fully automated, the new Caledon facility will sort up to 35,000 packages per hour and house a fleet of more than 200 package cars. Congratulations to Prologis and Cushman & Wakefield teams on this transaction.
12424 Dixie Road, Caledon
7. 1395 Tapscott Road, Toronto – Canada Post
At 1395 Tapscott Road, Canada Post is developing its GTA East Facility of 553,249 SF on 44.53 Acres of land with 667 parking spots and 40’ clear height.
1395 Tapscott Road, Toronto – Source: City of Toronto
8. Pickering Innovation Corridor – Kubota
The Pickering Innovation Corridor is comprised of about 800 acres of land along Highway 407 between York-Durham Townline Road and Brock Road, previously owned y the Province of Ontario. A shortage of development land in Toronto, coupled with the Highway #407 extension, has opened the area up for industrial and commercial development.
Kubota Canada is in the process of constructing a 500,000-square-foot warehouse, with an additional 65,000 square feet of head office space. The first phase is scheduled for completion in 2020. Future phases could see Kubota Canada expanding to more than a million square feet on this site, including testing, training, and logistics facilities.
Pickering Innovation Corridor – Kubota Canada Proposed Development
9. 17 – 25 Vickers Road and 170 The West Mall, Toronto – Metro
Metro commenced with the construction of their new, 537,000 SF Fresh Distribution Centre at 17 and 25 Vickers Road as well as their 210,000 SF, 80’ clear Frozen Distribution Centre at 170 The West Mall, for a total of about 747,000 SF of space.
10. 150 Gibraltar Road, Vaughan – Give & Go Prepared Foods Corporation
Glen Corporation completed the construction of 150 Gibraltar Road in Vaughan, which is now leased to Give & Go Foods. This is a modern Warehouse & Distribution facility with 36’ clear height, 8” floor slab, LED lighting, Cambridge unit heaters, 54’x42’10” bay size, and is full precast construction.
150 Gibraltar Road, Vaughan – Source: Glen Corporation
2019 GTA TOP TEN INDUSTRIAL LAND SALES BY SIZE
2019 GTA TOP TEN INDUSTRIAL LAND SALES BY PRICE PER ACRE
What Lies Ahead:
- Rental Rates: The GTA Industrial Average Net Rental Asking Rates increased by more than 20% year-over-year to $8.60 PSF, the highest level we have ever seen. It is important to note that our market is one of the top in North America; alongside New Jersey, Los Angeles and Chicago. With a bit less inventory than LA and almost identical vacancy rates, we still have lots of room for growth….. Average Rental Rates in LA are currently at $12.00 PSF plus and increasing….. I expect to see further growth in Toronto, specifically in the small- and mid-bay market…
- Property Values: The Average Sale Price in the GTA is about $225 PSF, while small- and mid-bay product is fetching more than $300 PSF…. this trend will continue…
- Development Opportunities: The GTA Industrial Markets will continue to be very active as far as development is concerned… Over 90 % of all new construction is pre-leased prior to completion or shortly thereafter. This creates almost no impact on our vacancy rates, resulting in almost zero net new inventory…. We will continue to see an increase in infill development since Occupiers are looking for proximity to the labour pool as well as a reduction in transportation costs (which dwarfs the cost of leasing or purchasing real estate)… Furthermore, a number of major developers have purchased land in the Durham Region and will be bringing a few million SF of new product online over the next few years, which will represent the largest increase in inventory that the GTA East Industrial Markets have ever seen….
CONCLUSION:
We have development coming from across the board – from the West to North to East markets – and even in the Central Markets, where there is no land available; and where developers are purchasing older buildings and demolishing them to build modern distribution centres.
This will continue to put upward pressure on land values…
Overall, I am looking forward to what’s to come in 2020 and beyond. Given the vacancy rates, it may seem like the market is at a stand-still, but that is not the case. We are always finding land and infill development sites. If you have any projects or developments that you would like to discuss or are looking for off-market opportunities, then please contact me.
Until next week…
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.
Goran Brelih is a Senior Vice President for Cushman & Wakefield ULC in the Greater Toronto Area.
Over the past 27 years, he has been involved in the lease or sale of approximately 25.7 million square feet of industrial space, valued in excess of $1.6 billion dollars while averaging between 40 and 50 transactions per year and achieving the highest level of sales, from the President’s Round Table to Top Ten in GTA and the National Top Ten.
Goran is currently serving as Immediate Past President of the SIOR ‐ Society of Industrial and Office Realtors, Central Canadian Chapter and on the Board of Directors of Muki Baum Accessibility Centre, a Toronto‐based NGO which provides support to children and adults with complex disabilities.
Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development
About Cushman & Wakefield ULC.
Cushman & Wakefield is a leading global real estate services firm that delivers exceptional value by putting ideas into action for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with 48,000 employees in approximately 400 offices and 70 countries.
In 2017, the firm had revenue of $6.9 billion across core services of property, facilities and project management, leasing, capital markets, advisory, and other services. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.
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.
