The industrial real estate market is booming in Canada, with record-breaking investment and development activity. This is being driven by a number of factors, including the low Canadian dollar, strong economy, and limited supply of industrial land. As a result, investors are eager to get into the market, while developers are rushing to build new projects. For now, though, it’s a great time to be in the Canadian industrial real estate market!
Lease prices for industrial spaces and plots of land designated for commercial development have grown rapidly in recent years, especially in Canadian markets. The following will explore the current state of the market and offer predictions for what is to come.
Situation
Several of Canada’s markets no longer have available industrial space, and some of our most in-demand markets don’t have any serviced land allocated for industrial development.
The 2021 Industrial Figures Q4 report stated that the national industrial availability rate fell below 2% for the first time ever. With less space available, rental asking rates have increased significantly by 10.9% (year-over-year) nationally, and up to 32.3% in bigger markets like Montreal.
Year-over-year, the average asking sale price has increased by 27.9%, with some markets seeing an 100% increase. This is especially evident in major metropolitan areas like Vancouver, Toronto, Ottawa and Montreal where prices have reached $400/sq ft.
In the current market, where vacancy rates are low and competition is high, many landlords are beginning to shorten their lease terms from 10-15 years down to only 3-5. This way, they can charge higher renewing or new tenant rents.
This inflation can cause significant problems for businesses, who may have to spend more on overhead or raise prices for customers. Inflation is currently the highest it has been in 40 years.
Solutions
There is currently a lot of construction activity going on nationwide, with 36.2 million sq. ft. of industrial space being built. However, nearly 70% of this commercial industrial real estate has already been pre-leased! This means businesses that need space will need to act quickly if they want to secure a spot.
The housing crisis in Canada is continuing to grow due to the ongoing issues with finding serviced land that is able for industrial use. This has become a major key driver in current market conditions and something needs to be done about it soon. There needs to be an increase of viable industrial space which include developing unserviced industrial land as well as getting rid of zoning restrictions and bureaucratic red tape that only delays progress. Without taking these measures, there is no way out of this affordability crisis we are facing .
With commercial real estate becoming more rare and in higher demand, the industrial real estate market in Canada is expected to become even more popular. While this will be great for landlords, it will become increasingly difficult for businesses.
Results
Team Arora Commercial Real Estate Team is committed to purposeful development. Serving the Peel Region and Halton region for more than 18 years, our commercial realtors work with buyers and sellers, as well as with landlords and tenants, to secure fair and equitable terms. We believe in honesty, integrity and community.
Whether you’re looking to buy commercial real estate, looking for industrial vacant land for lease in Peel Region and Halton Hill Region or looking for commercial industrial real estate for lease, Team Arora commercial real estate experts can help.
Contact Team Arora Realty to learn more about our approach, find commercial land, for lease in Brampton, Mississauga view our current commercial real estate listings, or find out how we can help you achieve your commercial real estate goals.