Establishing True Valuations Across Differing Markets
The City of Vaughan Industrial Market was the most active among the GTA-North markets this quarter, with more than 1,430,000 SF transacted, leased, or sold. We have seen an equal amount of investment sales and user purchases with CAP rates reaching as low as 3% and sale prices exceeding $300 per SF.
The Markham and Richmond Hill leasing markets achieved the highest net rental rates, with Aurora and Newmarket running behind, but not by much.
The largest transaction this quarter by dollar volume ($26,500,000) and by size (290,000 SF) was an investment sale of the property located at 195 Harry Walker Parkway in Newmarket to Davpart Inc.
Key Takeaways from Q3 2019
- Strong demand and brisk leasing of available space pushed the availability rate down to just 1.2% in the GTA-North Markets in Q3 2019, with just 1.1% available for lease and 0.1% available for purchase.
- Absorption rose to a little more than 1 million SF this quarter.
- Currently, there is about 2,600,000 SF under construction in the GTA-North Markets, representing only 14.5% of the total construction in GTA in this quarter.
- A few large lease transactions were completed in the GTA-North Markets, including:
- Crane Logistics leasing 140,000 SF in Vaughan at 119 Snow Boulevard.
- Magna leasing 153,000 SF in Markham at 75 Frontenac Drive, and
- Napco Pipe leasing 267,000 SF in Vaughan at 71 Royal Group Crescent,
- With all of this activity and demand, and existing inventory being reduced to a historically new record of 1.1% of overall inventory, the weighted average net rental rates reached $9.31 per SF; the highest in the GTA Industrial markets.
Interesting Announcement This Quarter:
Highway 427 Expansion
The Highway 427 Expansion project will extend the highway 6.6 km, from Highway 7 to Major Mackenzie Drive and widen the existing highway to 8 lanes between Finch Avenue and Highway 7.
To continue construction of the interchange, Huntington Road between McGillivray Road and Major Mackenzie Drive will be closed permanently beginning October 28, 2019. The construction on the Highway 427 expansion began in May 2019 and the targeted completion is 2021.
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…
This week we are covering the Toronto North Markets (Vaughan, Markham, Richmond Hill, Newmarket & Aurora)
Statistical Summary – GTA Industrial Market – Q3 2019
GTA Industrial Market Overview – Q3 2019 – Credit – Cushman & Wakefield ULC
Statistical Summary – GTA North Markets (Vaughan, Markham, Richmond Hill, Newmarket & Aurora), Q3 2019
So let’s take a closer look at transactions completed this quarter….
GTA North Markets (Vaughan, Markham, Richmond Hill, Newmarket & Aurora)
Properties Sold between July 2019 – September 2019, from 20,000 SF plus
In Q3 2019, a total of 8 (622,045 SF) properties were sold in GTA North market; City of Vaughan market was the most active with 4 properties sold, 1 property was sold in Markham, 1 in Richmond Hill, 1 in Newmarket & 1 in East Gwillimbury. The prices achieved were in the range of $91 – $354 PSF, with an average building size of 77,756 SF and an average price of $208 PSF. Four transactions were investment sales and four were user purchases.
111-131 Bales Drive, East Gwillimbury
GTA North Markets (Vaughan)
Properties Leased between July 2019 – September 2019, from 20,000 SF plus
On the leasing side, a total of 9 properties (808,254 SF) were leased. The net rental rates achieved were from $6.85 – $11.95 PSF, with an average building size of 89,806 SF and an average net rental rate of $8.44 PSF.
600 Tesma Way, Vaughan
GTA North Markets (Markham)
Properties Leased between July 2019 – September 2019, from 20,000 SF plus
On the leasing side, a total of 4 properties were leased. The net rental rates achieved were from $6.75 – $12.25 PSF, with an average building size of 101,409 SF and an average net rental rate of $9.11 PSF.
400 Cochrane Drive, Markham
GTA North Markets (Richmond Hill & Aurora)
Properties Leased between July 2019 – September 2019, from 20,000 SF plus
On the leasing side, a total of 5 properties were leased. The net rental rates achieved were from $8.95 – $9.95 PSF, with an average building size of 41,735 SF and an average net rental rate of $9.41 PSF.
288 Don Hillock Drive, Aurora
What Lies Ahead:
- Rental Rates: Expect them to continue to increase at a similar pace.
- 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: The new extension of Highway 427 will bring with it new industrial development opportunities.
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.
