The market is benefiting from strong momentum carried over from last year
The Greater Toronto Area industrial market remains a hotbed of activity, with strong momentum from 2021 carrying over into the first quarter of 2022, according to a new report from Avison Young.
High demand and limited supply were the main drivers of the GTA market’s dynamism. Across the region, the availability rate stabilized at 0.9%, unchanged from Q4 2021.
“New building completions during the quarter did not influence the availability rate, as 91% of the new space was leased prior to completion,” Avison Young said. “Current market conditions favour landlords, and rental rates continue to rise rapidly.”
An estimated 66 million square feet (msf) of industrial space will be in the region’s development pipeline (under construction and pre-construction) over the next three years. The likely gains in availability will likely provide more options to a wider palette of industrial, Avison Young added.
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Over the past five quarters, leasing demand for spaces 10,000 square feet (sf) or larger has been dominated by logistics and distribution (31%), manufacturing (20%), and retail/e-commerce (18%) tenants, Avison Young said.
Rental rates increased by 16% on a quarterly basis, 94% over the past three years, and 104% over the past five years.
All current indicators point to these trends persisting in the near- and medium-term, according to the company.
“Low availability rates have offset the high land values and construction costs evident in today’s market,” it said. “Given the supply-demand imbalance, the consensus is for continued growth across the GTA industrial market for the foreseeable future.”
