July 26th, 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 Vaughan and examine the state of its industrial market, including notable opportunities and ongoing developments.
Vaughan 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 Vaughan’s share is almost 102M SF (about 12.3%). In Q2 2024, however, Vaughan had approximately 468,371 of negative absorption (adjusted year-to-date) and 561,520 SF of new supply.
The availability rate in Vaughan sits at 3.1% and – based on what we are seeing in the broader market – may increase slightly over the coming quarters but expected to stabilize. 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.
Vaughan Industrial Properties Available for Lease – 50,000 SF+
Vaughan Industrial Properties Available for Sale – 20,000 SF+
4 Interesting Facts about Vaughan’s Industrial Market
King Jane Business Park, King City – 1.7 MSF – Proposed (2024/25)
King Jane Business Park, King City. Source: Nicola Blackwood.
Nicola Blackwood has announced the development of the King Jane Business Park in King City. With approximately 1.7 million square feet across five state-of-the-art buildings, the project is expected to be Carbon Zero Certified and will not only offer advanced energy efficiencies but excellent connectivity with direct access to Highway 400 along King Road.
Phase 1 will see Buildings A and B ready for occupancy in Q4 2024. The former property will be 411,978 SF in size with 51 truck-level and 2 drive-in doors, while the latter will be 413,470 SF in size with 54 truck-level and 2 drive-in doors. Both will have 40 foot clear heights and 40 trailer parking spaces.
Phase 2 will see the remaining 3 buildings constructed. Building C will be the largest of the park at 560,660 SF with 110 truck-level and 4 drive-in doors, as well as 75 trailer parking spaces. Buildings D1 will be 132,625 SF in size with 23 truck-level and 2 drive-in doors, while Building D2 will be 136,848 SF in size with 28 truck-level and 2 drive-in doors. All three properties will have 40 foot clear heights and 56’ by 40’ bay sizes. Colliers is leading the leasing of the properties.
30 Labourer’s Way/350 Hunter’s Valley Rd – 418,000 SF – New Two-Building Development
30 Labourer’s Way & 350 Hunter’s Valley Rd. Source: Fengate/CBRE.
Fengate is developing a two-building, 418,000 square-foot industrial campus at 350 Hunter’s Valley Rd and 30 Labourer’s Way in Vaughan.
The east building – 350 Hunter’s Valley Road – is a 225,060 SF warehouse with a 36’ clear height, 35 truck-level and 2 drive-in doors, and 2,000 amps of heavy power. As of writing, approximately 70% has already been leased, with a 61,798 SF unit remaining, and which includes 6 truck-level and 1 drive-in door.
The west building – 30 Labourer’s Way – will be ready for occupancy in Q2 2025 and will be slightly smaller at 192,471 SF with a 36’ clear height, 27 truck-level and 2 drive-in doors, and 2,000 amps of heavy power.
Fronting onto Highway 50 and minutes from Highway 7, 407, 27, and the Highway 427 interchange at Langstaff, the site provides excellent connectivity and access to the labour pool, while also being surrounded by high-profile corporate neighbours and a multitude of new industrial developments. CBRE is marketing the asset – you can view their website here – https://350huntersvalleyroad.com.
400 Anatolian Drive – 535,071 SF – New Development
400 Anatolian Drive, Vaughan. Source: Anatolia Real Estate.
Anatolia Real Estate is developing a 532,071 SF warehouse at 400 Anatolian Drive in Vaughan. The property is being constructed in two phases – with the first 356,734 SF expected to be delivered in October 2024, followed by the 178,337 SF phase two expected for June 2025.
The building will have a 40 foot clear height with 83 truck-level and 2 drive-in doors, as well as 3,000 amps of heavy power. The site sits amongst numerous other Class-A developments by Anatolia and – like Fengate’s project – is well-located in proximity to transportation routes, amenities, corporate neighbours, and the labour pool. Colliers is marketing the asset for lease.
865 Gibraltar Road – 541,486 SF – New Development
865 Gibraltar Road, Vaughan. Source: CBRE.
In May 2024, Zzen Group completed the Phase 1 development of a 364,861 SF facility at 865 Gibraltar Road on the south-west corner of Highways 427 and 7 in Vaughan. The modern warehouse has a 40’ clear height with 46 truck-level and 3 drive-in doors, as well as 3,000 amps of heavy power.
According to site plans, a second phase of 176,625 SF will be ready for occupancy in 2025; bringing the project total to 541,486 SF. Phase 2, consisting of Units 5 and 6 (72,605 SF and 104,020 SF, respectively) will have an additional 22 truck-level and 2 drive-in doors. CBRE is marketing the asset.
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 Vaughan, 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 Vaughan’s proximity to the Core and major transportation routes, we are also seeing a number of cases of redevelopment to high-density, mixed-use projects – such as the VMC – in an attempt to supply much-needed housing.
In the coming weeks, we will dive into recent transactions and market KPIs across the major regions in an effort to get a clearer picture as to just how much the market shifted in Q2 2024. 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
