April 3, 2014
Toronto Real Estate Board Commercial Network Members reported a year-over-year increase in the total amount of combined industrial, commercial/retail and office space leased through the TorontoMLS system in the first quarter of 2014. In Q1 2014, total space leased amounted to 4,517,411 square feet – up by 3.6 per cent in comparison to 4,363,905 square feet leased during the first three months of 2013. The largest annual rate of growth was reported for the office market segment (+29 per cent), followed by the commercial/retail segment (+6.9 per cent). The total amount of industrial space leased was down by less than one per cent year-over-year.
Annual change in average lease rates was mixed. The average commercial lease rate, for properties leased on a per square foot net basis for which pricing was disclosed, was up by almost 23 per cent. Some of this change was due to a different mix of properties leasing this year compared to last. The average industrial lease rate was down only slightly compared to last year and the average office lease rate was down by approximately six per cent.
“Since coming out of the recession, we have certainly seen a few false starts as it relates to economic growth, particularly where business investment and exports are concerned. However, the first GDP data point for 2014 was very encouraging. Hopefully, the positive result for first quarter leasing activity in the GTA points to continued economic growth, as businesses take on more space in response to anticipated growth in demand for goods and services produced in southwestern Ontario,” said Commercial Committee Chair Cynthia Lai.
There were 197 combined industrial, commercial/retail and office property sales through the TorontoMLS system in the first quarter of 2014. Average selling prices on a per square foot basis for transactions where pricing was disclosed were up for industrial and commercial/retail properties and down for office properties. In addition to market forces, annual price changes also resulted from changes in the mix of properties sold, in terms of both size and geography.
“Conditions are in place to support an increase in commercial real estate investment in the GTA. The expectation is that the US economy will continue to pick up steam, which should help facilitate the long-awaited recovery in the Canadian export sector. All of this, coupled with the continuation of accommodative borrowing costs, could prompt an increase in sales activity moving forward,” continued Ms. Lai.