Catch Up Trade For Industrial
Industrial leasing has been the strongest commercial market in Canada for years, with rising rents and low availability nationwide. As rents rise, we’ve seen convergence between the most expensive industrial markets and the rest of the country. While the Greater Toronto Area used to lease at ~30% higher rates than Montreal, that margin has shrunk considerably during the pandemic, and may even reach parity in the future.
Prior to COVID there was still considerable variation in industrial lease rates, but all Colliers-tracked markets now register double-digit rents per square foot. The pace of growth has been rapid everywhere, but previously affordable markets such as Calgary have seen even larger increases. Similarly, more affordable submarkets within markets have “caught up” to the more expensive areas: for example, the eastern half of Toronto versus the historically more expensive western airport area.
Implications for tenants
- The search for affordable space will be more challenging, as lower-priced markets have caught up on rents.
- Given the land crunch in major metropolitan areas, industrial development has spread to secondary and tertiary markets. Land prices and availability have become an issue even in smaller markets.
- Challenges with zoning, labour availability and logistics need to be considered in smaller markets.