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Hot on the heels of a report from CBRE which noted that office vacancy rates have reached a record low in Toronto, new figures have been released by the Toronto Real Estate Board (TREB), showing changes in the Greater Toronto Area (GTA) commercial market recorded during the second quarter of 2017.
Over 6.5 million ft² of industrial, commercial/retail and office space was leased through TREB's MLS System during Q2 2017, a 10.7% decline from the 7.3 million ft² leased during the same period in 2016. The majority of these transactions were in the industrial market segment, representing approximately 75% of all transactions. Despite this, the 4.9 million ft² of industrial space leased during Q2 2017 fell well short of the 5.6 million ft² figure recorded in Q2 2016.
Average lease rates across the different commercial submarkets varied during Q2 2017, showing both upward and downward spikes. While the average office lease rate declined by 8.3% down to $13.98, industrial and commercial lease rates saw respective gains of 10.7% and 21.8%. The average industrial lease rate now sits at $6.11, while the commercial lease rate is at $21.46. These varying increases and decreases are being attributed to a mix of fluctuating market conditions and changes in the type of properties being sold.
A total of 304 combined commercial/retail and office sales recorded by TREB represents a decline from the 390 recorded during Q2 2016, with average sale prices rising for industrial and office markets, and declining for commercial and retail markets. The decline in commercial and retail sales reflects the ongoing decline of brick-and-mortar retailers in North America, while the rise in industrial and office sales underscores the high demand and low vacancy rates.
“By all accounts, the Canadian and GTA economy seems to be performing quite well", said TREB President Tim Syrianos in a prepared statement. "In the GTA, the unemployment rate remains low from a historic perspective. However, concerns do still exist with regard to sustained growth in the level of exports and business investment, which is especially important to the industrial market segment. Sustained growth in these areas of the economy moving forward, will likely correlate with sustained growth in commercial real estate transactions” said Syrianos.
