Outside of transactions deemed essential to a business’ operations, Waterloo Region’s industrial market remained quiet this quarter and recorded just 27,000 sq. ft. of positive net absorption as availability increased 10 bps to 2.6%. Activity has picked up in early June with an increase in food and beverage related users looking to enter Midwestern Ontario.
Despite the current economic slowdown, landlords and developers remain bullish on the Region’s industrial market, increasing the average net rent by 5.0% to a record high $6.33 per sq. ft. Led by Brantford’s net rent rebounding to $5.53 per sq. ft., five of six submarkets recorded rent escalations this quarter.
Due to construction delays pushing 55 Quarterman Rd’s completion date to early Q3 2020, 45 Quarterman Rd was the only project delivered this quarter. This facility offered little market relief as it was 76.8% pre-leased prior to completion.
As one of Canada’s fastest growing urban areas, Waterloo Region’s price-competitive industrial market is uniquely positioned for growth during this recession. One long-term supply chain trend which is expected to positively impact the Region is the rise of demand for safety stock. Given the market’s proximity to Toronto, Midwestern Ontario will present users a viable option to offset the rising cost associated with holding extra inventory.