Q3 2024 Insight, Toronto-West Markets

“The four most expensive words in the English language are, ‘This time it’s different.’”

• Sir John Templeton

Just like every economic cycle before now, market participants have been subject to the forces of supply and demand; with their outcomes largely determined by preparation, management, and timing.

The fact is that any market can be a profitable one. 

To that point, market fundamentals can also shed light on potential obstacles to success. 

As it stands, the Greater Toronto industrial market has experienced over 3.4-million square feet of negative absorption in 2024 amidst a second consecutive quarter of declining asking rents.

Meanwhile, 16.4-million square feet remains under construction with approximately 6.9-million square feet delivered year-to-date. 

Coupled with a pre-leasing average of just 37.7% (down significantly from the 86% during the post-pandemic period) and an 8-year-high additional 3.4-million square feet of sublet space, Owners and Developers have become both cautious and aggressive in securing new Tenants for their facilities.

Despite these alarming statistics, enormous sales and leasing transactions are still happening. And, to its credit, the GTA industrial market had its second-highest leasing activity in Q3 2024; helping to slow the rise in vacancies and provide the belief that we may be nearing the bottom.

The timing right now is quite opportunistic. Organizations are making decisions at a point where Landlords’ and Sellers’ expectations have already adjusted and been reflected in asking rents and values. These same Occupiers have more options now than in the past several years. And to boot, the Bank of Canada has been quick and fast in its cutting of interest rates over deflationary fears. 

All of these forces provide a thin-slice of information which, when gathered together, may form a story. We believe that, while there will continue to be a re-shuffling and fine-tuning of ownership and occupancies, Owners and Occupiers of industrial real estate will be better able to secure the space they need; helping to provide a more positive economic outlook.

So without further ado, let’s examine how each of the Greater Toronto Area regions performed in Q3 2024, and where we expect the market to go moving forward.

The GTA West Industrial Markets are by far the largest industrial markets in the GTA, representing about 47% of GTA Industrial Inventory, or 389,394,500 SF. The GTA West Markets were active this quarter and with more than 7,025,626 SF under construction. 

So, if you are an Investor, Landlord, or Owner-Occupier you may be wondering…

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: 

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 with our rental rates and valuations at all-time highs, and vacancy rates low, finding the right property is a real challenge.

Having said that, a lot of transactions are being done off the market.. and to participate in that, you should connect with experienced brokers that have long-standing relationships with property owners.  

For a confidential consultation or 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 30 years.

Goran Brelih is an Executive Vice President for Cushman & Wakefield ULC in the Greater Toronto Area. 

Over the past 30 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.

Specialties:
Industrial Real Estate Sales and Leasing, Investment Sales, Design-Build and Land Development

About Cushman & Wakefield ULC.
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries.

In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. To learn more, visit www.cushmanwakefield.com.

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.

Connect with Me Here! – Goran Brelih’s Linkedin Profile: https://ca.linkedin.com/in/goranbrelih