TORONTO - In its Industrial Real Estate Market Report published today, Newmark Knight Frank Devencore reported positive absorption of industrial space in most markets in the Greater Toronto Area in 2012. The overall availability rate in the GTA is now in the 5.0% range.
"Demand for high-quality distribution space and for spaces of 500,000 square feet or greater is tending to push up asking rental rates," said Rob Renaud, Senior Vice President and Managing Principal at Devencore Realties Corporation (Toronto West) Ltd., Brokerage. "That said, rates for high quality distribution space in the GTA compare very favourably to current asking net rental rates in both Calgary and Vancouver, although this class of space is in relatively short supply in the GTA at the present time."
Mr. Renaud explained that the demand for industrial space may be met in the coming 2-3 years by developer activity and by build-to-suit construction. There is also significant demand from smaller retailers for modern 50,000- to 80,000-square-foot industrial spaces with 32-foot clear heights. However, there are few developments currently available to address this need.
In its Market Report, Newmark Knight Frank Devencore also remarks on the controversy surrounding the decision by the Region of Peel to impose a significant increase in the development charges (DCs) it levies on developers of residential, office and industrial properties. As of
October 4, 2012 the rate for industrial development was estimated to have increased from $66.54 per square meter to $133.80 per square meter of land, and will be subject to biannual indexing.
"A study carried out for the Region of Peel maintains that the region remains competitive with other areas in the GTA; however, it remains to be seen what impact the increases will have on future development and lease rates," Mr. Renaud said. In the meantime, in late 2012, a number of high profile developers proceeded with their speculative construction projects to avoid DC increases on properties that had already received site plan approval.
Looking ahead, Mr. Renaud noted that dropping availability rates should encourage tenants to weigh their lease restructuring and their blend and extend options to take advantage of any remaining softness in the market.
"Opportunities in the GTA industrial market vary widely between regions, and the nature and extent of these opportunities can evolve rapidly. Preparedness is key in order to benefit from the current market dynamic," he said.
About Newmark Knight Frank Devencore
Devencore is the Canadian partner of Newmark Grubb Knight Frank, one of the largest real estate service firms in the world. Newmark Knight Frank Devencore is Canada's largest corporate real estate advisor and brokerage exclusively representing office, industrial, and retail space users. With offices across the country, Newmark Knight Frank Devencore offers its Canadian and global clientele comprehensive services that are individually designed to ensure executive real estate decisions are supported by effective strategies and professional execution. To learn more about our capabilities, please visit www.devencorenkf.com.
About Newmark Grubb Knight Frank
Newmark Grubb Knight Frank is one of the world's leading commercial real estate advisory firms. Together with its affiliates and London-based partner Knight Frank, Newmark Grubb Knight Frank employs more than 11,000 professionals, operating from more than 300 offices in established and emerging property markets on five continents.
Newmark Grubb Knight Frank's integrated services platform includes leasing advisory, global corporate services, investment sales and capital markets, consulting, program and project management, property and facilities management, and valuation services. A major force in the real estate marketplace, Newmark Grubb Knight Frank serves the local and global property requirements of tenants, landlords, investors and developers worldwide. For further information, visit www.newmarkkf.com.
Newmark Grubb Knight Frank is a part of BGC Partners, Inc. (NASDAQ: BGCP), a leading global brokerage company primarily servicing the wholesale financial and real estate markets. For further information, visit www.bgcpartners.com.
For further information, contact:
Director, Marketing and Communications
514-392-1330, ext. 225
Newmark Knight Frank Devencore
Devencore Ltd., Real Estate Agency
Rob Renaud, CCIM, SIOR, Broker
Senior Vice President and Managing Principal
416-366-0366, ext. 241
Newmark Knight Frank Devencore
GTA West Office
1 Eva Road, Suite 409
Devencore Realties Corporation Canada Limited, Brokerage