Renters across Canada—especially in the Greater Toronto Area—know that the residential real estate market is tight. But now potential leasers of commercial properties are feeling the pinch too.
According to the Financial Post, Toronto is currently the most constrained industrial market in North America, with only 2.2 percent availability. Experts credit Toronto’s ideal location and demographics, which appeal to both foreign and local companies.
CBRE Group, Inc., a real estate services and investment firm, reports that availability of industrial property across the country fell to a historically low level of 3.9 percent in 2018, while supply tightened in eight of the 10 major commercial real estate markets.
“Availability in Canada’s major industrial markets continues to plummet, which is putting pressure on tenants,” says Werner Dietl, executive vice-president and GTA regional managing director at CBRE Canada.
Demand for e-commerce, food distribution and warehousing are leading factors driving demand for industrial real estate in the country.
With more than 70.6 million square feet of available industrial space left across the country, Canada now has the highest net rent in its history: $7.21 per square foot in the second quarter of 2018.
Scott Ingram, a realtor with Century 21, told BNN Bloomberg that a slowing tenant turnover rate coupled with a growing population will further strain the market into 2019.
“The rental market in Toronto is definitely something to watch,” says Ingram.
Lauren Haw, the chief executive officer of Zoocasa, said Toronto’s burgeoning tech scene will be a major factor adding pressure to the city’s already-tight rental market. “There’s a lot of tech-related growth – these are well-paying jobs,” says Haw.
Larry Weltman agrees that the market will remain strong. As a Customer Service Representative at AccessEasyFunds, one of Canada’s leading commission advance companies, he understands the current crunch and has analyzed the landscape for years.
“There are economic points specific to Ontario that are beneficial to Toronto and to the province as a whole,” says Weltman. “Sales inside and outside of Toronto proper have been particularly high and I see that continuing for the rest of the year.”
According to brokerage Avison Young Canada Inc., the lowest unemployment rate in at least four decades—as well as demand—is keeping things tight. “More capital is available to move into real estate debt and equity than at any other time,” says Avison CEO Mark Rose. “The next wave of investment is not a matter of if or when — it’s just a matter of price.”
“We continue to feel very positive about opportunities in the real estate environment for the year ahead,” Rose added.