The Hunt for GTA Logistics Development Opportunities

For business owners, real estate managers, and operations executives, making real estate decisions in a rapidly-changing landscape can be challenging. Despite knowing your key metrics and performance indicators, it can be almost impossible to predict supply and demand when the data doesn’t adhere to historical figures. This is especially true during the ongoing supply chain crisis, a red-hot real estate market, and worker and material shortages.


However, staying on top of the market – which includes understanding the drastic change in costs, current availabilities, as well as future deliveries – can provide you with the knowledge you need to pull the trigger when the time is right. As we find ourselves quickly approaching ‘peak season,’ opportunities continue to be scarce. And for those companies with growth plans in the coming year and beyond, exploring your options on a regular basis helps mitigate the risk of not having enough space to fulfill your customers’ needs, as well as capture market share.


Let’s examine the current state of the GTA industrial logistics market.


GTA Industrial Land Suitable for Logistics Development


For the purposes of this article, we examined all land across the major GTA regions that is zoned as industrial and greater than 5 acres in size. These criteria represent a starting point for a prospective business or developer looking to purchase and construct a logistics-focused industrial property.


Below, Figure 1 shows a breakdown of 396 industrial parcels that were tracked as fitting our criteria. As depicted, York Region leads the way with 118 parcels, followed by Peel Region with 110; Durham Region with 80, Halton Region with 59, and Toronto with 29. The Western GTA markets account for 43% of industrial land parcels – while the North markets have 30%, the East 20%, and the Toronto core just 7%.



Figure 1: Industrial-zoned land parcels over 5 acres, by region. Source: CoStar.


Next, Figure 2 shows the last recorded sales value per acre of industrial land over 5 acres from 2016 to 2021. Our sample size was n=115 and is a subset of the previous chart for parcels where a sales value was recorded in the aforementioned timeframe.


What we see in the chart below is a steady trendline from an approximate average of $500,000 per acre in 2016, to an approximate average of $1.25M per acre in 2021. This represents a 250% increase in per-acre pricing over the past 5 years.



Figure 2: Pricing of industrial land over 5 acres, 2016 to 2021. Source: CoStar.


Finally, we looked at the average pricing of industrial land during the periods of 2012 to 2015, 2016 to 2018, and 2019 to 2021; based on recorded sales. We notice the average sales price increased from about $9M to $13.2M to $15.8M, respectively, while the average sales price per acre increased from approximately $530k to $644k to $1.1M, respectively.




Figure 3: Average pricing of industrial land across time periods. Source: CoStar.


Summary


Overall, the GTA industrial logistics market is red-hot and continues to experience supply challenges. This environment will see rents and values further increasing, spurring retailers and 3PLs to further consider purchasing industrial land and developing or pre-leasing one to two years in advance. The issue still remains that new construction will provide little relief until at least 2023.

Although we approach peak season, starting the conversation about your real estate footprint and examining your options on an ongoing basis will help you find the best facility for your needs when the time is right.

On that note, if you would like our team to help you secure your next facility, for more information on specific industrial land parcels, or off-market opportunities, please contact us directly.



Logistics and E-Commerce best practices, local expertise, and market intelligence across North America


Lee & Associates Logistics and E-Commerce - Our logistics and e-commerce real estate specialists are at the leading edge of this transformation and they understand your unique challenges with integration along with revised facility and property site requirements.

We will help you find the right location that optimizes your industry needs, market positioning, revenue growth, stability and profitability for decades to come. We focus on reducing your company’s operating costs and the carbon footprint.

Whether its assisting retailers optimize their real estate backend warehousing and distribution needs; helping logistics managers with bricks and mortar options at the front end (manufacturing) of the supply chain delivery; or finding that location needed to support your last mile or e-fulfilment strategy. We can help, let’s connect.


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

lalmeide@lee-associates.com

D 416.628.8151




*Sales Representative



17 views0 comments