May 6, 2014
Toronto Real Estate Board Commercial Network Members reported 450,092 square feet of combined industrial, commercial/retail and office space leased through the TorontoMLS system in April 2014, on a per square foot net basis where pricing was disclosed. This result was down from 625,545 square feet leased in April 2013. Industrial space accounted for three-quarters of all space leased in April.
“While the amount of space leased last month was down on a year-over-year basis, it is important to point out that the average lease rate for the all-important industrial segment was up by 11 per cent. This growth was due to both market forces and a change in the mix of industrial properties leased,” said Commercial Committee Chair Cynthia Lai.
The average industrial lease rate in April 2014 was $5.35 per square foot net – up by 11 per cent compared to $4.82 in April 2013. The average commercial/retail lease rate, at 18.63, was down by 15.8 per cent year-over-year. The average office lease rate was down by a similar 15.5 per cent over the same reporting period. For both the commercial/retail and office segments, much of the dip in the average lease rates was compositional, with a shift in the size and geography of properties leased.
There were a combined 45 industrial, commercial/retail and office sales reported in April 2014 through the TorontoMLS system. This result was down by 21 per cent compared to 57 sales in April 2013. Industrial and office sales were down on a year-over-year basis, while commercial/retail transactions were up.
Average sale prices on a per square foot basis were up for all market segments. The average industrial selling price was up by 15.8 per cent year-over-year to $108.13. The average commercial/retail selling price, at $212.46, represented an increase of 14.2 per cent year-over-year. Office property transactions had an average selling price of $217.54 – up 17.8 per cent compared to April 2013.
“For the first two months of 2014, we experienced a respectable pace of growth in the Canadian economy. In March, we also experienced quality employment growth in the GTA and a dip in the unemployment rate. The consensus view is that while the consumer-driven sectors of the economy continue to drive growth, we should see a greater contribution from business investment and exports moving forward. This will obviously be favorable for the commercial real estate market,” continued Ms. Lai.