Establishing True Valuations Across Differing Markets 

Q1 2020 Insight, Toronto-East Markets

May 22nd, 2020

The GTA-East Industrial Markets are the smallest in the GTA with about 42,000,000 SF; just 5% of overall Industrial Inventory in the entire region.

This year started off extremely strong with vacancy rates hitting historically low levels and net rental rates increasing in excess of 20% year over year. Everyone was struggling to find the right property to lease and/or purchase as the economy was firing on all cylinders. 

And then the COVID-19 pandemic hit… 

The Government ordered the closure of all non-essential businesses in mid-March and most activity in the marketplace was frozen….. Projects that were at early stages were put on hold or canceled, while conditional transactions were either canceled or extended until a later date…. Such a shift in the market during the final two weeks of Q1 will ripple out into Q2, as well as Q3.

It is too early to say but one thing is for sure, the lockdown and shutting down of businesses will have a long-lasting impact on our economy and the real estate market as well.

Key Takeaways from Q1 2020

  • 1.81 Million SF was under construction
  • We had 111,876 SF of new supply 
  • Vacancy rates are only 1.2% for lease and 0.1% for sale  
  • Weighted average asking lease rate was $7.18 PSF and weighted average sale price was $196.83 PSF

Interesting Announcement this Quarter

Panattoni commenced with the construction of two modern, state-of-the-art warehouse and distribution industrial buildings totalling 630,000 SF at 1121 and 1147 Thornton Road South in Oshawa. 

1121 & 1147 Thornton Road South, Oshawa – Development by Panattoni

1121 Thornton Road South comes with 40’ clear while 1147 Thornton Road South comes with a 36’ clear height.

Why Are the GTA-East Markets in Demand? 

Well, to preface this, we want to note that this quarter was not particularly active in terms of completed sales and leasing. That being said, there are a number of ongoing projects in the pipeline and under construction (1.81 Million SF) which may result in more activity as we move to re-open the economy and return to ‘normal.’

Overall, the GTA East Industrial Markets are 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, net rental rates pushing above $7.00 per SF, and sale prices hitting $200.00 per SF, many developers as well as users have jumped in, purchasing land and announcing new projects.

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-East Markets (Ajax, Oshawa, Pickering & Whitby)

Statistical Summary – GTA Industrial Market – Q1 2020

GTA Industrial Market Overview – Q1 2020 – Source: Cushman & Wakefield ULC

Statistical Summary – GTA-East Markets (Ajax, Oshawa, Pickering & Whitby) – Q1 2020

Q1 2020 GTA Industrial Market Statistics – Source: Cushman & Wakefield ULC 

So, let’s take a closer look at how the different Toronto East Markets performed during Q1 2020…

GTA East Markets (Ajax, Whitby & Clarington)
Properties Sold between October 2019 – December 2019, from 20,000 SF and larger 

In Q1 2020 in the Toronto-East markets, a total of 4 properties were sold (totalling 474,072 SF); Three were investment sales and 1 was a user sale. The prices achieved were in the range of $15- $117 PSF, with an average building size of 118,518 SF and an average sale price of $76 PSF.

2001 Forbes Street, Whitby

GTA East Markets (Pickering)
Properties Leased between January 2020 – March 2020, from 20,000 SF plus

In Q1 2020, 1 property was leased in the GTA-East Markets. The asking net rental rate was $8.95 PSF on a 44,762 SF building.

895 Sandy Beach Road, Pickering
What Lies Ahead:
  1. Rental Rates: Not all real estate is created equal…. It is important to note that the Industrial asset class will weather this storm and come out strong, if not stronger than before… with the only exception potentially being small-bay properties. Increases in online retail sales, moving away from “just in time” inventory and relocating parts of manufacturing back to Canada from overseas (and including the production of PPE equipment) will continue to put pressure on industrial markets; keeping our rental rates steady and increasing, although maybe at a slower pace.
  1. Property Values: Multi-tenant industrial properties that are owned by private equity funds (and are highly leveraged) may see some difficult days ahead… we may see vacancy rates increase and maybe even CAP rates as well… However, larger, single-tenant, logistics, warehouses and distribution facilities, and even manufacturing, should keep their values. A telling sign: those Landlords collected over 90% of their rents in April and May 2020….
  1. Development Opportunities: There is plenty of opportunity in the Durham Region. A number of large developers have purchased industrial land sites and commenced construction, with hundreds of acres still in the pipeline…


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?

Well, the answers to these questions will depend on a variety of factors, many of which we can quickly uncover in an assessment of your situation. 

And whether you are an Investor or Occupier or Lender we understand that the impact of the COVID-19 pandemic on your business may be significant. All parties involved have keen issues they are focused on and potentially different priorities at this moment. Proper and transparent communication is what will sustain and strengthen the relationships that will get us to the other side… Just remember…

We are all in this together…

DISCLAIMER: All information herein is for informational purposes only. This is not intended as professional legal, tax or accounting advice. We are not liable for any damages, real or perceived, as a result of you receiving or consuming this information. Please consult your attorney, accountant, or other counsel prior to making any decisions… 

As we navigate through these uncertain times, rest assured that our team is working diligently to meet the needs of our clients and colleagues. The manner in which we do business is changing constantly, but our commitment to providing the best information and advice remains the same.

Cushman & Wakefield’s leadership team and research resources are committed to providing information on the overall economic and, specifically, the commercial real estate impact due to this pandemic. Please continue to check for the latest information regarding COVID-19 and the commercial real estate industry.

We’re all in this together, so please reach out with any needs you may have during this time.

Please stay healthy and safe.

Best Regards,


Goran Brelih, SIOR

Senior Vice President, Broker
Cushman & Wakefield ULC, Brokerage.
Immediate Past President, SIOR – Central Canada Chapter

Office: 416-756-5456
Mobile: 416-458-4264


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