Build your advantage with news and analysis you won’t find anywhere else
Strong fundamentals have boosted Canadian industrial real estate to new heights in recent years, and 2019 was no exception.
CBRE stats from the fourth quarter show that a combination of record demand and low availability should continue to bolster rents in urban centres in the coming year.
The reason for the strong performance? Consumer expectations, the rise of ecommerce and expanding supply chains all have a role to play.
Increasingly, tenants are paying a premium for sites that meet their needs. In a competitive market, labour accessibility and transportation costs are major factors when it comes to site selection.
Want to know more? Read on for 10 stats that will put everything in perspective.
- Q4 2019 marked the 19th consecutive quarter of positive net absorption nationally, a reflection of the strong demand for new industrial supply across the country.
- The last quarter of 2019 also saw the largest annual industrial rental rate increase on record, in both absolute and percentage terms. The national average rental rate jumped a whopping 12.3% year-over-year to a record high of $8.69 psf.
- Amid record-low availability rates, 9.2 million sq. ft. of new industrial supply was introduced in Q4.
- Yet despite this being one of the highest quarterly new supply figures on record, the market remains remarkably tight. Over two-thirds of the product – 68.9% -- was delivered in Toronto alone.
- And the amount of supply in Canada’s industrial pipeline remains well above the 5-year historical average of 17.0 million sq. ft, at 25.0 million sq. ft.
- The national availability rate came in at 3.0%, but that number drops in cities with the highest demand. Toronto, Waterloo Region and Vancouver had rates of 1.4%, 1.9% and 2.4%, respectively.
- In fact, Toronto’s availability rate compressed for the 10th consecutive year in 2019. The market’s rate has decreased by 630 bps over the last decade, making Toronto one of North America’s tightest industrial markets.
- As a result, Toronto’s average net rental rate jumped by an astonishing 20.6% year-over-year to $8.62.
- For the third consecutive year, Metro Vancouver experienced net rent growth of over 10.0%, jumping by 10.9% year-over-year to $12.5 psf.
- Even cities that hadn’t been considered as tight as Toronto and Vancouver are feeling the crunch. Montreal’s availability rate sat below the national average at 2.7%, while Ottawa’s came in at just 2.8%.