2023 North America Industrial Big Box Review & Outlook: Toronto

The local warehouse labor force of 204,870 is expected to grow by 12% by 2032. The average hourly wage for a non-supervisory employee is C$18.00 (USD $14.43), one of.

Figure 2: Toronto Warehouse & Storage Labor Fundamentals

*Median Wage in Canadian Dollars; Warehouseperson occupation (NOC 7452).
Source: CBRE Research, Oxford Economics, Canada Job Bank, January 2023.

Location Incentives

Over the past five years, there have been 79 publicly known economic incentives deals totaling over $476 million for an average of $82,039 per new job in metro Toronto, according to Wavteq.

CBRE’s Location Incentives Group reports that the extent, if any, of province and local incentives offerings for metro Toronto industrial projects depends on location and scope of the operation.

Figure 3: Toronto Top Incentive Programs

Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.

Logistics Driver

Toronto has convenient access to seven major highways that connect to locations across Canada and U.S. border crossings. The market is served by both the Canadian National and Canadian Pacific railways, with intermodal rail yards in Brampton, Caledon, Milton and Vaughan.

Toronto Pearson International Airport processes more than 45% of Canada’s air cargo, serving 175 international destinations. The airport is at the center of the region’s rail and highway network, making cargo easy to ship to the region’s big-box facilities.

Toronto has convenient access to seven major highways that connect to locations across Canada and U.S. border crossings.

Supply & Demand

With 268 million sq. ft. of total inventory, Toronto is the largest big-box market in Canada and North America’s seventh-largest. The direct vacancy rate is 0.8%, the third-lowest in North America, despite 7.6 million sq. ft of construction completions last year. Demand is so high that completions are leased before or at the time of completion. Any available existing space is leased prior to being vacated. This is creating record rent growth with first-year base rents up 40.9% year-over-year, North America’s third-highest. The lack of available space, primarily in spaces over 500,000 sq. ft., lowered transaction volume 25% to 9 million sq. ft. Net absorption dipped to 6.6 million sq. ft.

Developers are buying land farther out from the market core, with 11.1 million sq. ft. currently under construction. Just over 44% of this is already pre-leased, including 66% of the product between 500,000-749,999 sq. ft. First-year taking rents rose by 4.6% year-over-year. Toronto will remain one of North America’s most in-demand big-box markets. But the lack of available inventory will keep its vacancy rates at a record low for the foreseeable future.

Figure 4: Share of 2022 Leasing by Occupier Type

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.

Figure 5: Lease Transaction Volume by Size Range

Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.

Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range

Source: CBRE Research, 2022.

Figure 7: Direct Vacancy Rate by Size Range

Source: CBRE Research, 2022.

Figure 8: Under Construction & Percentage Preleased

Source: CBRE Research, 2022.

Figure 9: First Year Taking Rents (psf/yr)

Note: Taking Rents are in $CAD.
Source: CBRE Research, 2022.