That is, at least, until billions of new orders were placed on the internet in response to the initial lockdowns. That consumer habit has stuck, and since then, retailers, ‘e-tailers,’ 3PLs, and transportation companies have purchased, leased, and constructed hundreds of millions of square feet of logistics and warehousing space across North America.
In the Greater Toronto Area, those same businesses are vying for Class A space that is hard to come by. For those professionals involved in the search, you may have heard the endless tirades regarding this lack of options. However, few conversations have been had about the specific properties currently available on the market.
So, with that said, let’s take a quick look at the inventory of logistics facilities in the GTA and Greater Golden Horseshoe Area.
Key Performance Indicators for Logistic-Specific Facilities over 100k SF
Looking at the broad strokes, we see that the market for logistics-specific facilities over 100k square feet in the GTA and GGHA is extremely tight and robust. Construction activity has carried on - despite labour and material shortages - and absorption is slowing down as inventory falls further. This has translated into rental rates continuing to increase at a GGHA-wide-rate of 13.5% year-over-year to an average of $11.23 per SF.
Figure 1 – GTA and GGHA Logistics Market KPIs. Source: CoStar.
*year-over-year change in brackets
Logistics-Specific Facility Lease Availabilities
When looking at all of the logistics facilities in the GGHA that are either under construction, proposed, in final planning, or existing on-the-market, we see how very few there really are. Many of these buildings continue to be pre-leased ahead of completion, meaning businesses should expect opportunities to remain scarce.
Figure 2 – GTA and GGHA Logistics Availabilities Metrics. Source: CoStar.
*Based on available data. Rates on new construction are not always disclosed.
Figure – 3 - GGHA Logistics-Specific Facilities with 50,000SF+ Available. Source: CoStar.
Finally, when looking at these availabilities overlaid on a map of the GTA, we can observe the relative density of properties in the West submarkets, as well as the quickly-growing region towards Kitchener, Guelph, Brantford, and Hamilton.
Summary
Based on our evidence, we can infer that finding space suitable for a retailer, 3PL, or transportation company will become ever-more challenging in 2022 and beyond.
If you are planning to expand your operations, or are anticipating renewing one or more leases in the next 18 to 24 months, ensure you begin the process as early as possible.
Starting late will mean coming to the negotiating table with less leverage; ultimately resulting in fewer options and a missed opportunity for cost savings.
On that note, if you would like our team to assist with your next lease or purchase, or for more market intel or off-market opportunities, please contact us directly.
Corporate Real Estate best practices, local expertise, and market intelligence across North America.
Lee & Associates Corporate Real Estate Services - Portfolio Solutions group provides customers with a full range of commercial real estate services required for corporate investors and occupiers.
Having the right corporate real estate strategy in place – for individual locations as well as across an entire portfolio – is vital to occupiers and investors seeking to efficiently and effectively manage real estate holdings and take advantage of the opportunities being presented at each location.
Our North American network means we have on-the-ground experience of all regional submarkets. From transaction execution and portfolio management to lease administration and relocation coordination, our Portfolio Solutions team is uniquely positioned to assist you.
We Offer Solutions:
Transaction Management
Project Management
Lease Administration
Value and Tax Advisory
Portfolio Optimization
Market Research
Investment Sale Leaseback
Accounting Compliance IFRS & FASB
Let’s connect
Mark Cascagnette, SIOR*
President, Managing Partner
markcas@lee-associates.com D 416.628.8146
Luis Almeida, SIOR*
Senior Vice President, Partner
D 416.628.8151
*Sales Representative