“5,776,322 square feet was leased in office space, industrial space and commercial/retail space during first quarter of 2015 in Toronto.” – TREB
This figure is a sum of reports submitted by TREB Commercial Network Members who are spread all across Toronto. The 5,776,322 square feet of leased space is a 28.2 percent increase compared to the entire previous year.This is representative of the fact that industrial as well as commercial real estate market is experiencing a surge compared to the entire 2014.
In addition to the general square feet of lease, the reports contain other information related to commercial real estate of Toronto. The constituents of the reports shed light on several other components and variables of real estate of Toronto when making a quarter-quarter comparison.
The average per square foot lease rate for industrial property in Q1of 2015 was $5.39 which is 4.8 percent greater compared to the same quarter in 2014. On the other hand, the average rate for commercial/retail lease was down by 4.9 percent, making it $19.46 per square foot in Q1 2015. The average rate for office space was $12.64 per square foot, which showed a 2.8 percent increase compared to the first quarter of 2014.
“The economic situation in Canada remained uncertain through the first quarter of 2015 … the industrial leasing news for the Greater Toronto Area was certainly a positive.”Eherington – President, TREB.
At the start of 2015 and throughout its first quarter the economic situation of Canada was not clear and the investors remained uncertain about the direction the economy was going to take. However, the news that the industrial firms in Canada were taking more space retained the confidence of the investors in industrial and commercial real estate of Ontario in general and GTA in particular. Industries leasing more space in an uncertain economic situation meant that the firms had experienced or they hoped to experience some increase in their sales, which for GTA meant that it could actually benefit from the receding Canadian dollar value. All assumptions proved good for GTA and it actually did become the key beneficiary by experiencing a boom in first quarter leases.
Besides all the increase in per square foot price and the general lease space figure, the one area in which the first quarter of 2015 was down compared to Q1 of 2014 was the number of transactions or total sales. The figure in sales for the first quarter of 2015 was 187 which was 28.9 percent less compared to the figure of 263 in Q1 2014. This decrease in transactions was experienced equally by all the major three market segments. It is the increase in per square foot price that covers up for the decrease in the number of transactions and still makes Q1 of 2015 more profitable compared to the first quarter of 2014.
“GTA economy and commercial real estate market is comparatively well-positioned within Canada for 2015.” saidEtherington.
With the arrival of spring, the economic condition of Canada will become clearer.Only then can the exact impact of it on the commercial real estate could be judged. There is also a possibility that in the remaining quarters of 2015 the GTA industrial and commercial/retail estate market might show volatility in the leasing and sales figure, yet the commercial and industrial real estate of Canada in general, GTA in particular is on a path of boom, and it will continue on prospering throughout the year.
The doomsayers predicting the new bubble are coming at our market from all angles. HilliardMacBeth’s new book; When The Bubble Bursts, Surviving the Canadian Real Estate Crash, which I just finished reading, provides a very interesting perspective of the market. This book clearly focusses on the residential market, but typically residential fluctuations, whether positive or negative tend to have an impact on the commercial sectors which usually follows. The book looks into and provides a very insightful look at the level of debt and types of debt compared to the U.S. debt landscape and why we could just as easily be in a bubble which is ready to burst!