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JLL charts strong Toronto industrial market

JLL charts strong Toronto industrial market

TORONTO — Real estate consultant JLL projects that Toronto industrial construction starts could hit a multi-year high if current trends continue.

JLL reported in its Q1 Industrial Insights newsletter focused on Toronto that at the end of Q1 2022 total industrial space under construction reached almost 12.2 million square feet as developers “scramble to bring new supply to Greater Toronto’s hot industrial market.”

Notable starts include Building B at Crestpoint’s GTA East Business Park at over 700,000 square feet and a 750,000-square-foot project by Broccolini and Investors Group at 11233 and 11319 Derry Rd. in Mississauga.

Total space under construction has increased 35.4 per cent over the past three quarters and is now at the highest level seen since the onset of the pandemic. Over the next two quarters the number is expected to increase significantly with construction starts expected to reach eight million square feet over that time. 

“This will likely translate into a multi-year high for construction completions in 2023,” stated JLL. “While the construction pipeline may represent some hope for users desperate for space, the reality remains that the market is extremely tight.”

The two largest buildings to break ground this quarter were both fully leased, to H&M in Ajax and Lowes in Milton. While 44.5 per cent of space currently under construction is still available, many landlords have been holding off on signing deals until a project is near complete to take advantage of rental rates that are rapidly increasing, stated the newsletter.

Average rental rates hit $14.27 in Q1 and have more than doubled since Q2 2018.

Meanwhile, vacancy remained unchanged quarter-over-quarter and currently sits at a historic low of 0.8 per cent.

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