greater toronto area industrial market · greater toronto area industrial market second quarter...

Research & Forecast Report

GREATER TORONTO AREAINDUSTRIAL MARKET Second Quarter 2017

Market Summaries

GTA Market Overview ....................................................................................................3 GTA Central ............................................................................................................. 4 GTA East ................................................................................................................. 5 GTA North ............................................................................................................6-7 GTA West .............................................................................................................8-9

Glossary ............................................................................................................................. 10

Table of Contents

3Research & Forecast Report | Q2 2017 | Greater Toronto Area / Industrial | Colliers International

GTA Market Overview

Q2 2017The Greater Toronto Area (GTA) industrial market reported an overall availability rate of 2.7 percent in Q2 2017. The most notable change in availability took place in GTA East, specifically in East-Whitby. The GTA East and West experienced positive absorption. The GTA West saw a positive absorption in comparison to other markets as 396,518 square feet of industrial space was occupied. Almost half of this absorption came from the Brampton East submarket, and one-quarter of the absorption from Mississauga South /East. The GTA Central and North experienced negative absorption, as numerous buildings were vacated this quarter.

A total of 2,534,996 square feet of new supply was introduced to the market this quarter, all of it within the GTA West. The largest development is 13304 Coleraine Drive in Caledon by Canadian Tire (1.5 million square feet). The GTA is expected to receive 4.0 million square feet of new supply within the next few years.

RealTrack and Colliers data shows the average sales prices per square foot for industrial buildings purchased in the GTA was $169, a six percent increase from last quarter. Q2 2017 saw 77 transactions, a 35 percent increase from the same time last year. The majority of the sales transactions occurred in the GTA West, followed by the GTA Central market. The average cap rate for this quarter was recorded at 5.5 percent.

Market IndicatorsRelative to prior period

Market Q1 2017

Market Q2 2017

Trend

AVAILABILITY RATE 2.7% 2.7%

NET ABSORPTION 880,896 101,019

UNDER CONSTRUCTION 5,862,245 4,015,273

RENTAL RATE** $5.75 $6.32

*Projected **Rental rates for current quarter are for CBD. Rent forecast is for metro-wide rents.

Historical Performance and Forecast

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%

-3,000,000

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Availability Rate - Current

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Net Absorption (SF) New Supply (SF) Vacancy Rate (%)Net Absorption (SF) Current Qtr New Supply (SF)

Greater Toronto Area Expected & Completed New Supply (2010 - Present)

0

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Greater Toronto Area Expected & Completed New Supply(2010 - Present)

Developments Under Construction (SF) Completed New Supply (SF)

Developments Under Construction (SF) Completed New Supply (SF)

4 Research & Forecast Report | Q2 2017 | Greater Toronto Area / Industrial | Colliers International

GTA CentralThe GTA Central market’s availability rate remained fairly constant at 1.7 percent, once again the lowest of all other markets. This market experienced the largest increase in the average asking net rent from $5.16 last quarter to $5.91, a 15 percent increase. However, the GTA Central experienced negative absorption this quarter. The Central- East York submarket experienced the greatest amount of negative absorption, followed by Central – Don Mills. A few larger listings that came to the market were 25 Clayson Road in North York and 20 Research Road in East York, adding to the negative absorption. One of the larger contributors to the negative absorption was 30 Newbridge Road when Quality Pallets & Recycling vacated the space.

Trends > Green Storage Inc.’s purchase of 145 Eastern Avenue in Toronto, a building it occupies, was the largest sale transaction this quarter.

Notable Lease TransactionsTENANT NAME - ADDRESS MARKET SIZE (SF)

1. Canada Goose Inc.45 Commander Boulevard

Central - Scarborough West 117,179

2. JH McNairn Limited81 Maybrook Drive

Central - Scarborough West 40,781

Summary Statistics Q2 2017 Regional Industrial Market 2017 Q1 2017 Q2 Trend

Availability Rate 1.6% 1.7%

Net Absorption 96,858 -53,191

Under Construction (SF) 0 0

Average Asking Rent (PSF) $5.16 $5.91

Average Sale Price (PSF) $82.34 $129.98

Notable Lease Notable Sale New Supply

Notable Sale TransactionsADDRESS PRICE SIZE (SF)

3. 145 Eastern Avenue $36,666,722 136,645

4. 225 Rexdale Boulevard $33,700,000 303,724

5. 1870 Albion Road & 209 Carrier Drive $22,300,000 298,154

Highway 407

Finch Ave

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e St

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k Av

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Steeles Ave

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kham

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Eglinton Ave

TORONTO

Highway 401

54

Lake Ontario

3

21


0.0%

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-2,000,000

-1,500,000

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0

500,000

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*Forecasted data

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Net Absorption (SF) New Supply (SF) Vacancy Rate (%)Net Absorption (SF) Current Qtr New Supply (SF) Availability Rate - Current


GTA EastThe GTA East market reported an availability rate of 2.5 percent this quarter. This market saw the greatest decrease in the availability rate from last quarter, compared to all other markets, specifically in the Whitby submarket, where the availability rate decreased by 1.6 percent. Ajax was the only submarket to experience positive absorption. A notable lease transaction this quarter was in the Ajax submarket when Reliable Bookbinders Limited leased space within 106 McMaster Avenue, which was brokered by Colliers International. The GTA East saw an increase of $0.54 in their average net rent from last quarter, which makes it the second market following the GTA Central to see such a rise.

Trends > The largest sale transaction this quarter was Manulife Financial’s purchase of 240 South Blair Street for $27,350,000.



Net Absorption -127,347 21,510

Under Construction (SF) 0 0





*Forecasted data

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Regional Rd 5

Taunton Rd

Broc

k Rd

Lake

Rid

ge R

d

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coe

St

Highway 407

Highway 401

Oshawa

AjaxWhitby

WHITBYPICKERING 2

Lake Ontario

12 3


1. 2431108 Ontario Inc1725 McPherson Court East - Pickering 47,658

2. Reliable Bookbinders Ltd.106 McMaster Avenue East - Ajax 30,000


3. 240 South Blair Street $27,350,000 291,281


$5.95 $5.89 $6.31

$5.04 $5.43

$6.38 $6.65 $6.50 $6.70 $6.75

$0.00

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0-99K SF 100K-200K SF 200K+ 0-99K SF 100K-200K SF 200K+ 0-99K SF 100K-200K SF 200K+ 0-99K SF 100K-200K SF 200K+ 0-99K SF 100K-200K SF 200K+

Aver

age

Net R

ent

GTA North Average Asking Net Rent Q2 2017 - Direct Leases OnlyClear Height < 18' Clear Height 18'-21' Clear Height 22'-25'

3Options

15Options

2Options

6Options

7Options

5Options

3Options

1Options

6Options

Clear Height 26'-29' Clear Height 30'+

1Options

GTA NorthThe GTA North reported an availability rate of 2.3 percent, only a slight decrease from last quarter’s 2.5 percent. Both Richmond Hill and Newmarket experienced the largest change in the availability rate, down 0.7 percent from last quarter. The GTA North experienced negative absorption of 263,818 square feet. A few of the larger contributors to the negative absorption came from 767 Creditsone Road in Vaughan due to Metro Canada Logistics vacating the entire 247,800-square-foot building, and 100 Galcat Drive in Vaughan with HD Supply Litemor vacating suite 1. The average asking net rent increased to $6.55, a change of 8.8 percent. Within the Markham West submarket, the listings added this quarter were all for sublease spaces. Out of all the Q2 2017 sales transactions throughout the GTA, the GTA North had the highest price per square foot.

Trends > The largest transaction this quarter was Dufferin Construction’s purchase of 3300 King Vaughan Road for $18.5 million.

$5.40 $5.86 $6.20

$5.16 $5.60

$6.73

$5.74 $6.50 $6.82

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ent

GTA North Average Asking Net Rent Q4 2016 - Direct Leases Only

Clear Height < 18' Clear Height 18'-21' Clear Height 22'-25'

5Options

18Options

2Options

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8Options

4Options

4Options

1Options

3Options

Clear Height 26'-29' Clear Height 30'+



Net Absorption 52,801 -263,818

Under Construction (SF) 860,500 1,090,269



GTA North Average Asking Net Rent Q2 2017 - Direct Leases Only


*Forecasted data

(600,000)

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0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%

-600,000-400,000-200,000

0200,000400,000600,000800,000

1,000,0001,200,0001,400,0001,600,000

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GTA North


1. Royal Building Products750 Creditstone Road North - Vaughan 176,535

2. TOC Logistics Incorporated20 Graniteridge Road North - Vaughan 136,506

3. Global Choice Foods Ltd.150 Rainbow Creek Drive North - Vaughan 56,506

Upcoming and Available Facilities

Finch Ave

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e St

Kenn

edy

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Stouffville

Newmarket

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RichmondHill

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TORONTO

NEWMARKET

AURORA

VAUGHANMARKHAM

65 2

13

4


4. 3300 King Vaughan Road $18,500,000 92,950

5. 388 Romina Drive $13,610,660 75,800

6. 635 Hood Road $10,044,710 77,267

ADDRESS: 100 GIBRALTAR ROADAVAILABLE AREA: 383,194 SFOWNER: ANATOLIA CAPITAL CORPORATIONSTATUS: UNDER CONSTRUCTION

ADDRESS: 71 ROYAL GROUP CRESCENTAVAILABLE AREA: 267,071 SFOWNER: OMERS REALTY CORPORATIONSTATUS: BUILT

ADDRESS: 150 NEW HUNTINGTON ROAD (PHASE 1 & 2)AVAILABLE AREA: 298,600 SFOWNER: VAUGHAN WEST II LIMITEDSTATUS: PLANNED (200,100 SF IN DEC 2017, 98,500 SF IN OCT 2018)


GTA WestThe GTA West market experienced positive net absorption of 396,518 square feet. Two of the larger contributors to the positive absorption were Polar Pak’s lease of 104 Walker Drive, and Give & Go Prepared Food’s sublease of space within 1695 Drew Road. Colliers International brokered both these deals. A larger listing that came to the market was 7550 Transmere Drive, after Enesco Canada Corporation vacated the space. In Halton Hills, 665,206 square feet of vacant, new supply became available this quarter. Two buildings introduced to the market last quarter in Halton Hills are yet to be leased, causing the availability rate in this submarket to further increase from 28.8 percent to 32.9 percent.

Trends > The Region of Peel continues to have an under supply of 28’ plus clear height inventory.

> The big box segment had an increase in activity towards the end of this quarter.

> Significant land constraints could lead to a possible under supply of space leading into 2018/19.

$5.37

$6.75

$5.95

$6.62

$7.30

$6.20 $6.33

$7.48

$6.66 $6.54

$0.00

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Aver

age

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ent

GTA West Average Asking Net Rent Q2 2017 Direct Leases OnlyClear Height < 18' Clear Height 18'-21' Clear Height 22'-25' Clear Height 30'+

6Options

1Options

28Options

5Options

18Options

3Options

10Options

42Options

Clear Height 26'-29'

9Options

1Options

11Options

$2.78



Net Absorption 1,044,244 396,518

Under Construction (SF) 4,745,843 2,925,004



GTA West Average Asking Net Rent Q2 2017 - Direct Leases Only


*Forecasted data

(600,000)

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-2,000,000-1,500,000-1,000,000

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500,0001,000,0001,500,0002,000,0002,500,0003,000,000

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$5.78

$6.34 $5.95

$6.75

$5.56 $5.50

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$7.31

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0-99K SF 100K-200KSF

200K+ 0-99K SF 100K-200KSF

200K+ 0-99K SF 100K-200KSF

200K+ 0-99K SF 100K-200KSF

200K+ 0-99K SF 100K-200KSF

200K+

Aver

age

Net R

ent

GTA West Average Asking Net Rent Q4 2016 - Direct Leases Only

Clear Height < 18' Clear Height 18'-21' Clear Height 22'-25' Clear Height 30'+

9Options

1Options

29Options

6Options

1Options

21Options

4Options

12Options

40Options

Clear Height 26'-29'

8Options

1Options

12Options

$2.78


GTA West



1. Polar Pak Ltd-104 Walker Drive

West - Brampton East 248,769

2. Amcor Packaging-300 Kennedy Road South

West - Brampton West 112,509

401

Lake Ontario

Highway 407

QEW

Highway 401

Highway 410

Hig

hway

400

8

BRAMPTON7

8

9

95

87

6

OAKVILLE

13

MISSISSAUGA

2CN Intermodal

CP Intermodal

4Pearson Airport

Upcoming New SupplyADDRESS SIZE (SF) DEVELOPER COMPLETION MARKET

6. 13304 Coleraine Drive - Canadian Tire Distribution Facility 1,500,000 Canadian Tire 2017 Q2 West - Caledon

7. 2994 Peddie Road 665,206 CREIT 2017 Q2 West - Milton

8. 6 Cleve Court (phase 1) 369,790 Triovest Realty Advisors Inc 2017 Q2 West - Halton Hills


3. 8875 Tobram Road $158,250,000 895,038

4. 7055 Kennedy Road $60,067,000 288,350

5. 7525 Financial Drive $32,800,000 270,000

Upcoming and Available Facilities

ADDRESS: 13304 COLERAINE DRIVEAVAILABLE AREA: 0 SFOWNER: CANADIAN TIRESTATUS: NEW SUPPLY

ADDRESS: 6 CLEVE COURT (PHASE 1)AVAILABLE AREA: 369,790 SFOWNER: TRIOVEST REALTY ADVISORS INCSTATUS: NEW SUPPLY

ADDRESS: 2994 PEDDIE ROADAVAILABLE AREA: 665,206 SFOWNER: CREITSTATUS: NEW SUPPLY


Glossary

Weighted Average Asking Net Rent: The dollar amount requested by landlords for an available space, expressed as an average based on the weight of available space.

Availability: The total amount of space that is currently being marketed as available for lease or sublease at the end of the quarter. It includes space that is available, regardless of whether the space is vacant or occupied.

Net Absorption: The net absorption in available space in a given market between the current quarter and the previous quarter.

Direct Availability: Space that is being offered for lease directly from the landlord or owner of a building, not space by another tenant in the building trying to sublet a space that has already been leased.

Sublease Availability: Sublet space that is available for sublease by a tenant to another lessee for a term equal to or shorter than that held by the tenant under its original lease with the landlord.

Under Construction: Buildings where actual ground breaking has occurred (site excavation or foundation poured) and construction is ongoing (not abandoned or discontinued) but for which a certificate of occupancy has not yet been issued.

New Supply: Total square footage with completed construction, where all that remains is the installation of tenant finishes.

Days on the Market (DOM): How many days an available industrial property has been on the market for.

GTA Central: Includes East York, Etobicoke, North York, Scarborough, Toronto and York.

GTA East: Includes Ajax, Oshawa, Pickering, and Whitby.

GTA North: Includes Aurora, Markham, Newmarket, Richmond Hill, Vaughan and Whitchurch-Stouffville.

GTA West: Includes Brampton, Burlington, Caledon, Halton Hills, Milton, Mississauga and Oakville.


Forecast Assumptions & TerminologySurvey results presented on this report have been condensed for reference. Results are updated periodically to ensure accuracy and therefore historically published results are subject to change.

Absorption was calculated using moving averages of historical absorption data and supplemented with incoming new speculative and build-to-suit developments.

Colliers International has adopted NAIOP’s terms and definitions which is reflected in this glossary and report.

Copyright © 2017 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

About Colliers International Group Inc.

Colliers International Group Inc. is an industry leading global real estate services company with more than 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 100 outsourcing firms by the International Association of Outsourcing Professionals’ Global Outsourcing for 11 consecutive years, more than any other real estate services firm.

colliers.com

396 offices in 68 countries on 6 continentsUnited States: 153 Canada: 29 Latin America: 24 Asia Pacific: 79 EMEA: 111

$2.6BUS* in annual revenue

2Bsquare feet under management

15,000professionals and staff

*Based on 2016 results

MARKET CONTACT:Peter GarriganManaging Director, Industrial Practice Group Toronto Region DIRECT: +1 (416) 620 [email protected]

REGIONAL AUTHORS:Max Shapinko Market Intelligence Coordinator | Toronto DIRECT: +1 (416) 791 [email protected]

Shay RajaduraiMarket Intelligence Coordinator | Toronto DIRECT: +1 (416) 620 [email protected]

Colliers International | Toronto181 Bay Street, Suite 1400Toronto, ON | Canada

+1 416 777 2200

greater toronto area industrial market · greater toronto area industrial market second quarter...

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