Declining industrial availability, increasing deal velocity encouraging signs for Greater Toronto Area industrial market in 2011

Avison Young releases its Q4 2010 Greater Toronto Area Industrial Market Report

TORONTO, Feb. 10 /CNW/ - The Greater Toronto Area (GTA) industrial market, the largest in Canada and one of the largest in North America, saw its availability rate decline for the fourth consecutive quarter, finishing 2010 at 5.2%. This represents an improvement of 100 basis points (bps) since the end of 2009.

In the fourth quarter of 2010, all four major districts, which comprise 927 million square feet (msf) of industrial space across the GTA, witnessed lower availability rates. As a result, rental rates have stabilized and are poised to rise in the coming quarters. Tenants are taking advantage of plentiful opportunities and favourable market conditions to negotiate advantageous deals for industrial space, as evidenced by strong fourth-quarter 2010 deal velocity that continued from the third quarter.

These are some of the key trends noted in Avison Young's Q4 2010 Greater Toronto Area Industrial Market Report, released today.

"It was only a matter of time before we started to see some positive direction in both quantitative and qualitative measures in the industrial market, which was battered by the economic recession and the market's close ties to the automotive and manufacturing sectors," comments Bill Argeropoulos, Vice-President and Director of Research (Canada) for Avison Young. "The GTA is certainly outperforming some of the other larger industrial markets in North America such as Chicago and Los Angeles, whose availability rates are two-to-three times higher."

The GTA Central market remains tight as the availability rate declined 50 bps during the fourth quarter of 2010 to close the year at 4.2% - the lowest of the four districts and 100 bps below the GTA average. The bulk of the available space in this market is housed in multi-tenant buildings with a clear ceiling height of less than 18 feet.

GTA East, the smallest industrial district in the GTA with just under 60 msf, witnessed a 270-bps decline over the past two quarters, posting an availability rate of 4.8%. Sitting slightly lower at 4.4%, GTA North recorded a 40-bps drop from the previous quarter and, on average, quotes the highest asking net rental rates among the four districts at $6.23 per square foot.

Finally, GTA West, which represents the largest concentration of industrial space with 392 msf or 42% of the overall industrial stock in the GTA, continues to gain traction. Increased leasing velocity pushed the availability rate down for the fourth consecutive quarter to close out the year at 6.5%.

Although availability has been trending lower, leasing velocity is picking up and the rental market is showing signs of improvement, speculative construction has been largely absent during the market slowdown.

"With every passing day, the prospect of new industrial construction in the GTA, especially in the West, looks more likely," adds Avison Young Principal Jeff Flemington. "Decreasing large-block distribution availability and slowly increasing rental rates suggest that rental rates will continue to firm up in 2011, raising the possibility of speculative construction on the horizon."

Founded in 1978, Avison Young is Canada's largest independently-owned commercial real estate services company and the only national, Canadian-owned, principal-managed real estate brokerage firm in the country. Headquartered in Toronto, Ontario and ranked among Canada's leading national commercial real estate organizations, Avison Young is a full-service commercial real estate company comprising more than 700 real estate professionals in 23 offices across Canada and in the U.S. The company provides value-added, client-centric investment sales, leasing, advisory, management, financing and mortgage placement services to owners and occupiers of office, retail, industrial and multi-residential properties.

Editors/Real Estate Reporters
∙ Please click here to view Avison Young's Q4 2010 Greater Toronto Area Industrial Market Report:

SOURCE Avison Young (Canada) Inc.

For further information:

For further info/comment/photos:

  • Bill Argeropoulos, Vice-President and Director of Research (Canada), Avison Young:
    (416) 673-4029
  • Jeff Flemington, Principal, Avison Young: (905) 283-2333

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