Establishing True Valuations Across Differing Markets
It’s as if the community of investors and developers were too busy fighting over the West-ern territories to notice the East quietly sitting; under-valued and under-appreciated.
However; that is quickly changing.
The East’s land values, rental rates, and sale prices have been trailing that of the other GTA markets, prompting said investors and developers to seek out discounted opportunities.
Capital is overflowing and finding a nice home in the East; whose markets have a total of 42 million SF; considered to be the smaller markets in the GTA, and comprising about 5% of the total supply.
Now, the area is exploding with activity and spec construction.
The current pipeline and to-be-proposed construction in the East markets alone is greater than 4 million SF; almost equal to the completed construction for the entire GTA last year.
And so, it would seem that there is a healthy environment for both buying and selling; investing and developing.
Some investors, owners, and landlords are now looking to:
- see if now is the right time to sell given their unique situations, and
- maximize the value they can receive if they decide to do so.
What’s different now is that with renewed interest… people are speculating whether now is the best time to sell.
What’s missing for most owners, however, is the ability to position their assets to their highest and best use to execute properly and know they are doing the best they possibly can.
When examining the values, rates, and happenings (in a market where outpriced and frustrated buyers are flocking to) one should take these numbers with a grain of salt – as they may not fully factor in the changes that are occurring as we speak.
If you are a landlord or investor looking to properly valuate and assess what your land or building is worth right now – today – it may be prudent to look deeper into each sub-market, as well as taking into accounting any prevailing trends.
Even then, many trades are occurring in uncharted territory; a place ripe for receiving multiple, competitive, record-breaking, firm offers… if you have the right strategy, timing, and team in place.
You may be wondering…
“How much is my property really worth?”
What rental rate can I expect? How much $/PSF would I be able to get if I sold my building?
These questions are being asked all the time.
The answer to this will depend on a range of factors, including:
- the age and size of the building,
- lot size,
- ceiling height,
- office component,
- parking,
- trucking access,
- truck parking if available, etc….
In order to get to the truth, we need to dig a bit deeper…
This week we are covering the GTA-East Markets (Pickering, Ajax, Whitby, & Oshawa)…
Statistical Summary – GTA Industrial Market – Q2 2019
GTA Industrial Market Overview – Q2 2019 – Credit – Cushman & Wakefield ULC
Statistical Summary – GTA East Markets (Pickering, Ajax, Whitby & Oshawa), Q2 2019
Strong demand and a lack of newly vacant space pushed the availability rate down to just 1.4% in the GTA-East markets this quarter. Absorption rose to 251,500 SF from negative 51,339 SF in the first quarter of 2019.
Much of this growth can be attributed to The Shandex Group, a consumer packaged goods company, that leased 191,079 SF at 1055 Squires Beach Road in Pickering.
The GTA-East is capturing renewed interest from developers and investors. Crestpoint recently closed on a 129 Acre site in Ajax and is planning an industrial development upwards of 2 Million SF. Meanwhile, Ivanhoe Cambridge is planning an industrial development in Ajax of approximately 1 Million SF on a site previously slated for retail development.
As rental rates continue to rise and land prices remain low, the value proposition for the GTA East will continue to attract interest from institutional investors and developers.
Rental Rates
This quarter the net average asking rate continued its upward trajectory, reaching a new high of $7.40 PSF; close to a 20% increase year-over-year. The dire lack of available space will continue to support this trend.
A big unknown in the GTA East is the strength of occupier appetite for space in the market and, more importantly, how much they would be willing to pay.
Avg. Net Asking Rent Trend
Source Cushman & Wakefield TOE Research
Development/Inventory
A number of new developments are in the pipeline in GTA East.
- Carttera, which broke ground for a 370,000 SF speculative project in Whitby, is targeting occupancy of the first 185,000 SF phase by late 2019/early 2020.
- Panattoni is also expected to commence construction on their 630,000 SF development at Thornton and Wentworth in Oshawa within the next few months, while,
- PIRET is also preparing to move forward on their 100,000 SF development in Oshawa.
- Additional development announcements are expected in the coming months.
883 Thornton Road South, Oshawa – Proposed Development
Source: Panattoni Developments
Property Highlights
- Shipping 66 Truck Level Doors
- 190 Trailer Parking Stalls
- 5 Drive-in Doors
- Zoning General Industrial
- Clear Height 40’
- Distance to 401 5 min | 2.6km
- Square Footage 440,000 square feet, divisible to 80,000 square feet
Avg. Absorption vs. Availability
Source Cushman & Wakefield TOE Research
GTA East Markets (Pickering, Ajax, Whitby & Oshawa)
Properties Sold between April 2019 – June 2019, from 20,000 SF plus
In Q2 2019, a total of 7 properties were sold; 4 were investment sales and 3 were user sales. The prices achieved were in the range of $86 – $154 PSF, with an average building size of 112,987 SF and an average price of $120 PSF (which is considerably below that of Toronto-North, -Central, and -West markets).
Further, land prices are also considerably lower than in other markets; driving developers to purchase land and propose new developments in the pipeline. We predict most of this will be occupied by e-commerce and 3PLs for warehousing and distribution.
999 Boundary Road, Oshawa
Toronto East Markets
Properties Leased between April 2019 – June 2019, from 20,000 SF plus
On the leasing side, a total of 3 properties were leased. The net rental rates achieved were from $5.50 – $6.95 PSF, with an average building size of 79,514 SF and an average net rental rate of $6.32 PSF.
1055 Squired Beach Road, Pickering
Conclusion:
So, how much is your property really worth?
What rental rate can you expect or how much per SF would you be able to get if you sell your building?
How much can we compress CAP rates to create even greater value?
For a confidential consultation or for complimentary opinion of value of your property please give us a call.
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.
