Addressing shortfalls as soon as possible is crucial since Ontario remains a major industrial hub, report says
Ontario’s industrial inventory shortage might materially affect other regions, such as Atlantic Canada, if businesses and investors pursue substitute locations, according to a RE/MAX analysis.
The report estimates that in Toronto alone, nearly 45 million square feet of additional industrial space would need to be developed and put into the market to push the availability rate to 5%.
“Today, there are approximately 14 million square feet under development in Toronto,” RE/MAX said. “Put simply, this is insufficient to satisfy demand.”
Addressing this shortfall as soon as possible is crucial since Ontario remains a major industrial hub for the country.
“The economic output of the most populous province substantially impacts the broader growth and stability of the Canadian economy,” RE/MAX said.
“In the current economic climate, there are several sectors that are contributing to the inventory shortage in Ontario’s industrial space: e-commerce, manufacturing, and distribution and logistics centres. Supply conditions have failed to keep up with the demand for these industrial sector components amid limited land availability and a scarcity of new industrial development, resulting in higher lease and sale prices.”
Keith Reading, Senior Director of Research at Morguard Corporation, points to the robust performance of the industrial and multi-residential sectors, which offset quieter retail and office activity.https://t.co/ZywdYgZaWD#mortgageindustry #commercialmarket #realestate
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 22, 2023
In response to these trends, many Ontario businesses have started looking into alternative locations situated in markets poised for near-future strength, with Newfoundland and Labrador emerging as one of the strongest candidates.
“The spillover effects of this shortage could impact Newfoundland and Labrador if businesses place a bullseye on the province,” RE/MAX said.
“If any of these expectations are accurate, demand from businesses and investors in Ontario could apply pressure on the industrial real estate supply in Newfoundland and Labrador. As a result, it would then trigger a shortage of suitable industrial properties for local businesses in the eastern province.”
This scenario is considered likely as Newfoundland and Labrador price points might prove especially attractive to Ontario businesses.
“Should demand persist in Ontario, this would bolster the industrial expansion in the Maritimes, including St. John’s, where industrial real estate is currently the most robust commercial asset class,” RE/MAX said.
