Toronto - In its Industrial Real Estate Market Study published today, Newmark Knight Frank Devencore reported that availability rates in industrial properties across the Greater Toronto Area (GTA) have dropped to approximately 4.0%, as low as they have been for the past few years. In part, this tightening of the market reflects the changing face of the GTA's industrial activity. Large retail, e-commerce, logistics, distribution and warehousing businesses are beginning to overshadow manufacturing operations.
"The rapid growth of these tenant classes is generating the increasingly strong demand for larger state-of-the-art distribution centers," said Rob Renaud, Managing Principal/Broker of Record at Newmark Knight Frank Devencore's Toronto West office1. "At the moment, options are extremely limited for tenants requiring this type of space. This is despite the fact that almost 6 million square feet of industrial and logistics space was added to the GTA over the past eighteen months, representing the largest addition of such product since 2008."
Tenants currently seeking larger blocks of space will have a significant impact on space availability throughout this market in the months ahead. However, Mr. Renaud noted that the space squeeze should begin to ease in the coming year or two based on current speculative development, which will see an additional 5.2 million square feet of industrial space delivered to the market, mostly in the GTA West.
Across the rest of the country, the economy has continued to be challenged by global oil prices that have plummeted to historic lows and a currency that has declined significantly against the U.S. dollar. Those provinces whose life-blood is the oil industry--Alberta, Newfoundland and Labrador, and Saskatchewan to a somewhat lesser degree--are feeling the impact the most. On the other hand, Ontario and British Columbia are expected to register solid growth in 2016, driven by the export, distribution and logistics and manufacturing sectors, which are being helped along by strong U.S. demand.
"Conventional wisdom holds that the effects of a low Canadian dollar are generally positive for the GTA's industrial sector, and indeed the manufacturing and export sectors are reaping some benefits," said Sean Fiset, Vice President and Sales Representative at Newmark Knight Frank Devencore's Toronto West office1. "However, the fact remains that a low Canadian dollar signals the market's general lack of faith in the economy, and this may have an impact on investment over the longer term. As the shift continues to evolve from idle warehouses and retail power centres to the growth of high-throughput distribution centres and e-commerce fulfilment centres which cater to the needs of today's "on-demand" society, the landscape of the industrial real estate market will continue to change."
About Newmark Knight Frank Devencore
As part of Newmark Grubb Knight Frank, one of the world's leading commercial real estate advisory firms, Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage, exclusively representing corporate, industrial and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world's leading commercial real estate advisory firms. Together with London-based partner Knight Frank and independently-owned offices, NGKF's 12,800 professionals operate from more than 370 offices in established and emerging property markets on six continents.
With roots dating back to 1929, NGKF's strong foundation makes it one of the most trusted names in commercial real estate. NGKF's full-service platform comprises BGC's real estate services segment, offering commercial real estate tenants, landlords, investors and developers a wide range of services including leasing; capital markets services, including investment sales, debt placement, appraisal, and valuation services; commercial mortgage brokerage services; as well as corporate advisory services, consulting, project and development management, and property and corporate facilities management services. For further information, visit www.ngkf.com.
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For further information contact:
Broker of Record
Newmark Knight Frank Devencore
1 Devencore Realties Corporation
(Toronto West) Ltd., Brokerage
1 Eva Road, Suite 409
Toronto, Ontario M9C 4Z5