July 19th, 2024

“Deciding what not to do is as important as deciding what to do.”

  • Steve Jobs

With all of the distractions out in the world, social media, and our general daily lives – not to mention the constant bombardment of new information – it would be virtually impossible to function without putting filters in place.

And just as we are subject to external influences vying for our attention, we must also make decisions in our professional careers on what to do next with our limited time and energy. Developing general skills is important, however, it is the deep, focused, studious work which can generate enormous momentum.

Similarly, in commercial real estate, we often see investors, developers, analysts, and brokers find success from being able to pair a comprehensive, broad-stroked knowledge of the broader market and economics with a deep understanding of a specific industry vertical or geographic territory.

Throughout many of our issues, we have examined macroeconomic trends and explored various strategies. In our upcoming newsletters, we will try to complement this by diving deeper into a few of our key submarkets.

For this week’s newsletter, we’ll feature the Municipality of Scarborough and examine the state of its industrial market, including notable opportunities and ongoing developments. 

Scarborough Industrial Market Snapshot – Q2 2024


Source: Cushman & Wakefield Research.

Looking at the current inventory numbers, we have over 824M SF of industrial space across the GTA; yet Scarborough’s share is just over 61M SF (about 7.4%). In Q2 2024, however, Scarborough had approximately 361,476 SF of negative absorption and no new supply.

The availability rate in Scarborough sits at 2.1% and – based on what we are seeing in the broader market – may increase slightly over the coming quarters. Furthermore, we have seen price reductions in properties available for sale or lease. Depending on the individual asset and market trajectory, we expect to see further price reductions or inducements offered by Landlords to fill their space.

Scarborough Industrial Properties Available for Lease – 50,000 SF+

Scarborough Industrial Properties Available for Sale – 50,000 SF+

3 Interesting Facts about Scarborough’s Industrial Market

  1. 601 Milner Avenue – Toronto East Logistics – 350,000 SF Redevelopment

601 Milner Avenue. Source: Cushman & Wakefield.

Toronto East Logistics, located at 601 Milner Avenue, will bring 350,000 SF of warehousing and logistics space that will be ready for occupancy in Q4 2024.

The state-of-the-art facility will have:

  • 40’ clear height;
  • 56’ by 40’ bays;
  • 61 TL shipping doors;
  • 43 trailer parking spots; and
  • 1,600A/600V heavy power.
Strategically located with over 1,000 ft of frontage on Highway 401 at Markham Road, and with excellent access to the labour pool, public transit, and major transportation routes, this is a great opportunity for any business with logistics and warehousing needs. For more information, contact our team.
  1. Steeles Connect Industrial Campus, Scarborough – 700,000 SF Development

Steeles Connect, Scarborough. Source: Colliers.

Olea Dev Real Estate Group and BMO are constructing over 700,000 SF of Class-A industrial space on the southeast corner of Victoria Park Avenue and Steeles Avenue East at the Scarborough-Markham border.

Situated on 30.8 acres, the two-building campus will be delivered in 2 phases, with building 1 targeting substantial completion in Q2 2025 and building 2 to follow a year later in Q2 2026. Specifications for building 2 have not yet been released, however, building 1 will see 451,669 SF constructed with 40’ clear, 53 truck-level and 2 drive-in doors, 3000 amps of heavy power, 58 trailer parking stalls, as well as being Net Zero Carbon certified. Colliers is marketing the asset.

  1. Morningside Business Centre – 2560, 2540, & 2340 Morningside Avenue, Scarborough – Beedie

2560, 2540, & 2340 Morningside Avenue, Scarborough. Source: Beedie.
Beedie developed a three-building, 347,910 SF industrial condo with 36 units ranging in size from 6,883 SF to 14,428 SF. Condos have a 28’ clear height with 10’ clear mezzanine, 2,000 amps of power, and a mix of shipping from one drive-in door up to 2 truck-level and 1 drive-in doors. The units are now 60% sold. Cushman & Wakefield is representing Beedie. Learn more at morningsidebusinesscentre.com.
Conclusion

While the overall GTA industrial market is in the midst of a correction following a decade-plus expansion, each region and submarket has its own factors and constraints. Since we last profiled Scarborough, we have seen industrial rents and values stabilize; with an increase in vacancies, price reductions, and a longer deal cycle.

Opportunities to purchase and lease industrial space are more plentiful than before, however both Buyers and Tenants remain cautious due to a softening economy and sustained increases in borrowing costs.

That said, because of Scarborough’s central location, we are also seeing a number of cases of redevelopment to high-density, mixed-use projects in an attempt to supply much-needed housing.

Next week, we will cap off our examination of various submarkets with the aim of uncovering potential opportunities and strategies for industrial Owners and Occupiers. In the meantime, if you are an owner of industrial land or property with redevelopment potential, there are plenty of institutional and private buyers who would be willing to take it off your hands.

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

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