[Report] Q4 2022: Toronto-East Markets

Should every investor buy into the Southern Ontario industrial market?

And should every industrial property owner try to cash out at some of the strongest valuations we’ve ever seen (despite the hairiness of increased interest rates)?

Well, this begs the question if one should do anything ‘just because’ it is opportunistic and can be validated by the opinions and actions of others. To address the above questions: yes, one should, but if, and only if, one meets certain criteria.

At the end of the day, we are looking to manage returns and risk, and to do so in a way that aligns with our own personal preferences and long-term objectives. If all the proverbial boxes are ticked, then the question becomes, “how does one do it?”

And despite all of the data and intel at our fingertips, we are no doubt moving through uncharted waters. The ability to predict and insulate oneself from future shifts in the market through prudent management may be more top-of-mind now than speed-to-market or aggressive acquisitions and asset-banking.

Looking back at the momentous upswing in popularity of the GTA’s industrial market, making decisions on the way up is relatively simple. When market and economic fundamentals are good, we can at least rationalize our moves in knowing that we have an out (through selling) and that we can lock in new gains in rents or values – even if they are not at new watermark levels (i.e. leasing our property for $16 PSF net and missing out on a few potential extra dollars).

Today, however, strategy is everything. Finding value is more difficult. Being ready to pounce on opportunities will not only position you to grow in difficult times, but to cultivate greater returns when the economy strengthens once more.

How we do this, as was raised earlier, is twofold. Managing oneself and one’s portfolio, and carefully poring over inbound data and intelligence to quickly analyze, verify, and execute on deals that make sense for you or your organization.

So with that said, let’s examine how each of the Greater Toronto Area regions performed in Q4 2022, and where we expect the market to go moving forward.

Generally, the Toronto-East markets have strong economics – relatively inexpensive land compared to other markets in the GTA, better availability of land, better located industrial land with proximity to the City, relatively low development charges, and great access to major highways.

We have seen a number of major Users and Developers step in and make commitments on large pieces of land for spec development and design build, which amounts to millions of square feet being built and in the pipeline.

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