M A R K E T B E AT

ECONOMYThroughout 2019, Canada’s economic growth has slowed as manufacturing and other industrial related sectors began to weaken inthe face of a highly uncertain global environment. According to Statistics Canada, manufacturing, which makes up 12.4% of Ontario’s GDP and 68% of the nation’s exports, has decreased 2.6% year-over-year since October 2018. As the international price of oil declines and the Nation’s other primary sectors have begun to weaken, Canada is experiencing a decrease in projected exports. Despite Canada’s financial sector remaining strong, other indicators such as increases in unemployment rates leave Canada’s economy highly ambiguous leading into 2020. When considering what factors may influence Canada’s economic stability in 2020, certain intergovernmental negotiations, such as a new NAFTA agreement, may have significant influence on the country’s overall well-being.

SUPPLY AND DEMANDIn the fourth quarter of 2019, two new industrial developments were completed in Waterloo Region, adding a total 248,695 square feet (sf) of new inventory. Interestingly, both developments were nearly fully leased prior to completion. Pre-leasing has become a popular trend across Waterloo Region’s new industrial developments due to the high demand for space and the shortage of existinginventory. Currently, The Region has upwards of 700,000 sf of industrial space under construction, with an additional 2.5 million square feet proposed. With the scarcity of developable industrial land in Kitchener and Waterloo, the majority of the proposed construction is focused in Cambridge and Guelph, primarily in the Lovell and Hanlon industrial parks. With vacancy rates across industrial assets reaching all-time lows at the beginning of 2019, Waterloo Region and Guelph have experienced marginal relief with vacancy rates increasing through the end of 2019, now resting at 2.4%. Due to the scarcity of available industrial space across the Region, finding available space for lease or for sale will continue to be a challenge. With Toronto experiencing upward pressure in rental rates, paired with record low availability, Waterloo Region and Guelph will continue to attract both investors and occupiers looking for a greater yield on their investment.

PRICINGWhile Toronto, Vancouver and Ottawa continue to experience dramatic increases in rental rates for industrial space, though less pronounced, rental rates across Waterloo Region are slowly revealing similar trends. For available industrial space across the Region, the average gross asking rent is sitting at $9.17 per square foot. This number fails to consider new industrial developments that are built to suit, or completely leased prior to the property hitting the market.

2.4%Vacancy Rate

90,994Net Absorption, SF

$9.17 Gross Asking Rent, PSF

(Overall, All PropertyClasses)

5.2%Waterloo RegionUnemployment Rate

305.5KWaterloo RegionEmployment

5.9%CanadaUnemployment Rate

Source: Statistics Canada

Industrial Q4 2019Waterloo Region

ECONOMIC INDICATORS Q4 2019

12-Mo.Forecast

12-Mo.Forecast

YoY Chg

YoY Chg

SPACE DEMAND / DELIVERIES OVERALL VACANCY & GROSS ASKING RENT

0

500

1,000

1,500

2,000

2,500

3,000

2015 2016 2017 2018 2019

Thou

sand

s

Net Absorption, SF Construction Completions, SF

88.1KGuelph Employment

5.3%Guelph Unemployment Rate

0%1%2%3%4%5%6%7%8%

$0

$2

$4

$6

$8

$10

$12

2015 2016 2017 2018 2019

Asking Gross Rent, $ PSF Vacancy Rate

M A R K E T B E AT

Industrial Q4 2019Waterloo RegionMARKET STATISTICS

Chad VrenjakMarket Analyst+1 519 804 4359 /chad.vrenjak@cushwakewr.com

KEY SALE TRANSACTIONS Q4 2019

cushmanwakefield.com

A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION©2020 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.

SUBMARKETINVENTORY

(SF)OVERALL VACANT

(SF)OVERALL VACANTY

RATE

CURRENT QTR OVERALL NET

ABSORPTION (SF)

YTD OVERALL NETABSORPTION

(SF)

UNDER CNSTR

(SF)

YTDCONSTRUCTION COMPLETIONS

DIRECT WEIGHTED

AVG. NET RENT

DIRECT WIGHTED AVG.

ADD. RENT

DIRECT WEIGHTED AVG. GROSS. RENT

Cambridge 10,459,071 216,768 2.1% 117,414 -27,678 115,000 177,990 $6.32 $4.00 $10.32

Eagle 3,810,053 260,896 6.8% -32,517 -120,226 0 0 $6.96 $3.11 $10.08

Eastern 5,149,921 61,278 1.2% 139,802 573,294 0 143,695 $5.74 $2.66 $8.40

L.G. Lovell 11,552,207 188,056 1.6% -671 235,869 0 31,595 $6.99 $3.78 $10.76

Misc. 2,245,835 0 0.0% 18,500 37,211 0 0 $0.00 $0.00 $0.00CAMBRIDGE TOTALS 33,217,087 726,998 2.2% 242,528 698,470 115,000 353,280 $6.61 $3.45 $10.05

Bridgeport 3,121,820 177,525 5.7% 32,325 -32,585 0 0 $5.69 $2.25 $7.94

Hanson/Ardelt 1,820,276 23,738 1.3% 0 -850 0 0 $0.00 $0.00 $0.00

Huron 4,764,758 10,080 0.2% 187 22,540 154,390 0 $7.95 $3.50 $11.45

Lancaster 1,640,783 0 0.0% 0 0 0 0 $0.00 $0.00 $0.00

Manitou 2,010,691 0 0.0% 8,750 22,206 0 0 $0.00 $0.00 $0.00

Wilson 2,677,855 22,293 0.8% 7,897 -22,293 0 0 $0.00 $0.00 $0.00

Misc. 3,168,409 66,230 2.1% -14,700 -25,260 0 0 $6.49 $2.73 $9.22KITCHENER TOTALS 19,204,592 299,866 1.6% 34,459 -36,242 154,390 0 $5.99 $2.43 $8.41

Conestoga 4,207,091 284,800 6.8% 7,036 -239,633 0 0 $5.70 $2.53 $8.23

Dearborn 637,125 62,958 9.9% 15,000 -49,370 0 0 $7.00 $2.50 $9.50Northland 3,065,871 129,557 4.2% -48,191 -56,248 0 0 $6.75 $2.96 $9.71

Misc. 1,038,300 0 0.0% 0 2,400 0 0 $0.00 $0.00 $0.00WATERLOO TOTALS 8,948,387 477,315 5.3% -26,155 -342,851 0 0 $6.16 $2.65 $8.81

Hanlon 6,036,522 242,059 4.0% -26,214 -106,729 386,919 0 $7.26 $3.39 $10.65

Northwest 13,782,247 103,920 0.8% -68,758 85,195 0 0 $7.73 $3.50 $11.23

Puslinch 2,013,437 0 0.0% 0 30,000 0 0 $0.00 $0.00 $0.00

York Watson 1,276,926 20,583 1.6% 0 -16,533 22,400 0 $7.47 $3.84 $11.30

Misc. 2,524,911 198,008 7.8% -64,866 -169,366 0 0 $4.30 $3.04 $7.33GUELPH TOTALS 25,634,043 564,570 2.2% -159,838 -177,433 409,319 0 $6.13 $3.27 $9.40WATERLOO REGION TOTALS

87,004,109 2,068,749 2 . 4% 90,944 141,944 678,709 353,280 $6.22 $2.95 $9.17

PROPERTY SUBMARKET SELLER/ BUYER SF PRICE/ $ PSF6 Forwell Road Kitchener/ Bridgeport Named Individuals/ 2724871 Ontario Inc 14,000 $ 2,800,000/

$200353 Bridge Street East Kitchener/ Bridgeport Dannick Holdings Inc/ 2446801 Ontario Inc 12,908 $2,225,000/

$17215 Howard Place Kitchener/ Bridgeport Cindymax Enterprise Ltd/ Muffco Inc 7,417 $ 1,321,500/

$178