Circumstances have a way of changing things.

We may believe that we are different, and that we can deal with anything that comes our way, however, pragmatism and risk-tolerance often dictate how we respond to changing conditions.

As summer rolls towards a close, we typically ramp up towards a busy fall through the holiday season. Per the ebbs and flows of the annual cycle, business decision-makers and investors – after having returned from some well-deserved rest – find themselves staring down the runway of the final third of the year, ready to make the necessary moves to hit their year-end goals.

However, the past two and a half years have been anything but normal. In 2020, we saw a ‘black hole’ of activity from early March through summer’s beginnings, after which, there was a flurry of activity from June through December. Both were atypical, albeit, the busy period was welcomed by those sitting on the sidelines and waiting to see how events would unfold.

Since then, we have seen a bull industrial market unlike ever before. Retailers went all-in on e-commerce and omni-channel fulfilment. Logistics and transportation firms, feeling the squeeze of supply chain and labour constraints on one end, and unending consumer demands on the other, scooped up unparalleled volumes of warehousing and distribution space.

Which leads us to today. After many corporations and developers played the clear winning hand of industrial ‘Big Box’ development, we see some firms pulling back, while investors struggle to find industrial land.

Furthermore, many users and investors are unclear as to what the next ‘shift’ will bring; or even what the next shift will be, or when. Will our current paradigm continue? Will we see a reversal towards small- and mid-bay manufacturing? Will remote work spread populations and extend industrial networks further out? Or will we see Big Box morph into mega multi-storey warehouses and further intensification of use? Or all of the above?

So many forces seem to be converging, and the noise in the marketplace is so unbearably loud, with the ‘influencers’ peddling their version of the truth (never biased or oversimplified in any way).

All that is for certain is that we will see change. How, when, or what will be the trigger event, remains to be seen. In any event, industrial real estate is what facilitates the production, processing, storing, and movement of goods. And the need for all that, too, will remain indefinitely.

With that said, for this week’s newsletter, we will revisit the topic of industrial condo developments within the 416-area of North York, Etobicoke, and Scarborough, while taking a look at some of the major projects underway.

While land and industrial assets within these submarkets can be quite expensive when compared to developing in municipalities such as Waterloo, Brantford, Pickering, Caledon, or Aurora, the fact is that location, location, location has and always will drive real estate. And given we may experience an economic contraction in the coming months, these areas may represent a hedge against speculative risk.

For occupiers: As mentioned, being well-located within the Core means proximity to labour and a higher-density consumer base. Additionally, small- and mid-bay industrial product is incredibly scarce, especially as much of the focus in the development community over the past decade has centered around Big Box warehouses.

For investors: As occupiers look to take advantage of the location benefits, investors can satisfy that need and collect a premium on rents or sale values. And as mentioned, with small- and mid-bay product a rare offering, the demand for these assets is incredibly robust.