TORONTO — The Greater Toronto Area industrial market remains a hotbed of activity according to Avison Young’s recently released Q2 report.
Strong fundamentals carried through the second quarter of 2022, led by high demand and limited supply, stated the firm’s Industrial Market Report. New building completions during the quarter did not influence the availability rate, as 84 per cent of the new space was leased prior to completion.
Current market conditions favour landlords, and rental rates continue to rise rapidly, says Avison Young. With 65 million square feet in the development pipeline for the next three years (under construction and pre-construction), rising availability will likely provide more space options to a broader spectrum of industrial tenants compared with today’s constrained supply environment.
GTA-wide, the availability rate remained unchanged at 0.9 per cent – this on the heels of a steady decline from a high of 7.1 per cent in first-quarter 2010. Leasing demand over the past five quarters for spaces 10,000 square feet or greater has been dominated by logistics and distribution (38 per cent), manufacturing (19 per cent), consumer goods and services (15 per cent), and retail/e-commerce (13 per cent) tenants.
During the quarter, 20 buildings totalling 2.8 million square feet were delivered. At quarter-end, 15 million square feet was under construction across 64 buildings, of which 45 per cent had already been leased.
Pre-construction developments total 50 million square feet in 143 buildings across the GTA. The GTA West market leads the way with 62 per cent of pre-construction opportunities, followed by 20 per cent in the north and nine per cent each in the central and east markets.