Establishing True Valuations Across Differing Markets
This week we are covering the Toronto East Markets (Ajax, Oshawa, Pickering, & Whitby)
Statistical Summary – GTA Industrial Market – Q3 2019
GTA Industrial Market Overview – Q3 2019 – Credit – Cushman & Wakefield ULC
Statistical Summary – GTA East Markets (Ajax, Oshawa, Pickering, & Whitby)
The GTA East Industrial Markets are the smallest markets among all GTA Markets, representing only about 5% of GTA Industrial Inventory, or about 42,000,000 SF. The Durham Markets were the least active this quarter, with only a few lease and sale transactions completed greater than 20,000 SF (averaging $7.23 net per SF), which was the lowest average net rental rate among all GTA Industrial markets.
The sales market was more active than the leasing market; with the largest sale transaction by dollar volume ($10,706,000.00) and by size (88,680 SF) being an investment sale of a multi-tenant industrial building located at 100 Scotia Court in Whitby, sold at $121 per SF or a 5.2% CAP rate.
Key Takeaways from Q3 2019
- Vacancy rates are only 1.1% for lease and 0.1% for sale
- Currently, there is more than 2,000,000 SF under construction in the GTA-East Markets
- Very few transactions were completed in the GTA East Markets this quarter, including:
- Paramount Pallets leasing 185,000 SF in Whitby at 1672 Tricont Avenue, and
- Shelbourne Capital purchasing 88,700 SF in Whitby at 100 Scotia Court.
So, 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…
So let’s take a closer look at transactions completed this quarter….
GTA East Markets (Ajax, Oshawa, Pickering, & Whitby)
Properties Sold between July 2019 – September 2019, from 20,000 SF plus
In Q3 2019 in the Toronto East markets, a total of 4 properties were sold (228,914 SF); All were investment sales. The prices achieved were in the range of $75 – $128 PSF, with an average building size of 57,229 SF and an average price of $112 PSF.
GTA East Markets (North York)
Properties Leased between July 2019 – September 2019, from 20,000 SF plus
In Q3 2019 in North York Sub Market a total of 3 properties were leased (233,110 SF). The net rental rates achieved were from $5.50 – $6.95 PSF, with an average building size of 104,527 SF and an average net rental rate of $6.15 PSF.
1845 Clements Road, Ajax
Interesting Developments in the GTA East Industrial Markets
The GTA East Industrial Market is increasingly being viewed as a value play with lower land costs, growing rents, and a surge in demand for Class A product. With historically low vacancy rates, many developers have jumped in, purchasing land and announcing new projects.
It looks like most of the activity was focused on new development and land acquisitions.
Crestpoint with Blackwood Partners, Panattoni, Ivanhoe Cambridge, Carttera, Broccolini, Anatolia Capital, Beedie… they are all present here…What a premium list of developers, these people know what they are doing …
The Durham region is, for sure, one of the most active regions in GTA with respect to new development, and in my opinion, is a region with the most upside in value for the coming years.
GTA East Industrial Park, Ajax
Blackwood Partners and Crestpoint Real Estate Investments Ltd. are offering the latest Industrial Park in Ajax, Ontario located at Salem Road & Rossland Road East. Up to 2.2 M SF of class A industrial space is available for lease.
GTA East Industrial Park, Ajax Proposed Site Plan – Source: Blackwood Partners
GTA East Industrial Park, Ajax – Source: Blackwood Partners
Kingston Road, Ajax
Ivanhoe Cambridge proposed a new development of approximately 1.2 M SF in Ajax on Kingston Road.
1121 & 1147 Thornton Road South, Oshawa
This is Panattoni’s first project in Durham Region. A total of 630,000 SF of development in two buildings (409,962 SF with a 40-foot clear height under steel & 220,411 SF with a 36-foot clear height under steel joists) shall be completed in August 2020.
1121 & 1147 Thornton Road South, Oshawa – Source: Panattoni
1121 Thornton Road South, Oshawa – Source: Panattoni
883 Thornton Road South, Oshawa
440,000 SF speculative industrial building build by Panattoni, with substantial completion expected in late 2020.
883 Thornton Road South, Oshawa – Source: Panattoni
1652 & 1672 Tricont Avenue, Whitby
1652 Tricont Avenue being 185,000 SF speculative development by Carttera available at some time in 2020 is still available for lease while 1672 Tricont Avenue is fully leased.
1652 & 1672 Tricont Avenue, Whitby – Source: Carttera
Development Land In the Pipeline:
What Lies Ahead:
- Rental Rates: Being at a significantly lower level than the rest of GTA Industrial Markets, expect them to increase at a proportionally higher rate
- Property Values: With this low-supply environment, high demand, and cheap money, they can only go in one direction… and that is up.
- Development Opportunities: It feels like everyone is focused on Durham, with its low cost to enter, the potential higher upside in value drives development in the region.
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 a 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.
