Establishing True Valuations Across Differing Markets
January 31st, 2025
As we reflect on the fourth quarter of 2024, the industrial real estate landscape across the Central Toronto markets — including Toronto, North York, Etobicoke, and Scarborough — reveals key insights that will shape strategies moving into 2025.
The market has shown resilience despite ongoing economic challenges, with continued demand in prime locations driving leasing activity and influencing valuations. Notable market trends in Q4 include an increase in the overall availability rate, up from 2.6% to 3.1%, and a modest uptick in asking net rents, rising to $16.91 PSF from $16.87 PSF in Q3 2024.
In terms of sales, the weighted average asking sale price across the GTA Central markets saw a slight dip, down to $404.52 PSF from $407.12 PSF in the previous quarter. However, with 513,242 square feet under construction and strong leasing demand, the market remains active.
On the economic front, there has been a positive shift with interest rates falling once again, which is expected to encourage acquisitions and investment sales moving into 2025. Additionally, we’ve seen a pickup in leasing activity, signalling greater confidence from occupiers.
Despite these positive developments, uncertainty persists in the market, particularly with regard to tariffs, the weakening dollar, and the overall direction of the economy. These factors continue to weigh on sentiment and could impact future performance.
This report dives deeper into the specific performance of each market and explores where we expect the sector to move as we head into 2025. Whether you’re an investor, landlord, or occupier, understanding these key metrics and economic trends is crucial for navigating the evolving landscape and identifying opportunities as the year progresses.
So without further ado, let’s examine how each of the Greater Toronto Area regions performed in Q4 2024, and where we expect the market to go moving forward.
- The availability rate increased from 2.6% to 3.1%, with a lease availability rate of 2.9% and a sale availability rate of 0.2%;
- We had 513,242 SF under construction;
- We had 429,740 SF of negative absorption;
- The weighted average asking net rent was $16.91 PSF, up from $16.87 the previous quarter, with additional rent of $4.42 PSF (an increase from $4.26 PSF); and
- The weighted average asking sale price decreased from $407.12 PSF to $404.52 PSF.
Why are the GTA Central Markets in such demand?
Is it proximity to labour and a higher population density, and thus, a reduction in transportation cost? Or is it savings in development charges vs 905 areas, proximity to major transportation nodes, highways, public transportation, etc?… Or all of the above?
Well, one thing is for certain, the Toronto-Central Markets are highly sought-after by both Investors and Occupiers of commercial real estate and is an environment worth exploring for opportunities.
So, if you are an Investor, Landlord, or Owner-Occupier 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….
This week we are covering the Toronto Central Markets (Toronto, North York, Etobicoke & Scarborough)
Statistical Summary – GTA Central Markets – Q4 2024
Q4 2024, GTA Industrial Market Overview – Source: Cushman & Wakefield
Q4 2024, Industrial Market Overview – Source: Cushman & Wakefield
GTA Central Markets (Scarborough)
1615 Warden Avenue, Scarborough.
GTA Central Markets (Scarborough)
1120 Birchmount Road, Scarborough.
GTA Central Markets (North York)
400 Fenmar Drive, North York
GTA Central Markets (North York)
40 Carl Hall Road, North York.
195 Rexdale Boulevard, Etobicoke
Properties Leased between October 2024 – December 2024, from 20,000 SF plus
Rendering of 121 Thirtieth Street. Source: Oxford.
- Rental Rates: Rents continue to adjust and, in many cases, we continue to see rate reductions. We expect this to continue. Likewise, annual rental escalations have plateaued and have decreased. Leasing is picking up and businesses are making decisions. Further, there is continued downward pressure on rents, specifically in Class B or C industrial buildings. Overall, we are in a more balanced market between Landlords and Tenants.
- Property Values: As rental rates plateau, and as we see rents decrease in certain properties, we are going to see a decrease in value of investment properties. The recent and continued interest rate cuts may stabilize this trend, however. For users, we expect to see values remain elevated as supply of properties for sale is extremely limited. Finally, and despite the downward trend of interest rates, previously elevated levels have decreased the value of development land.
- Development Opportunities: Looking across the Toronto-Central markets, there is still great interest from developers to purchase infill sites and redevelop older and obsolete industrial buildings to newer, modern distribution centres, as well as industrial condos. Given its central location and proximity to major highways and labour, larger industrial sites in the Toronto-Central markets will continue to be in great demand.
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?
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
Goran Brelih, SIOR
Executive Vice President, Broker
Cushman & Wakefield ULC, Brokerage.
www.cushmanwakefield.com
Office: 416-756-5456
Mobile: 416-458-4264
Mail: goran.brelih@cushwake.com
Website: www.goranbrelih.com
