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Industrial rents exceed suburban office in some markets

Industrial rents exceed suburban office in some markets hero

We released new leasing statistics last week, and we’ve reached a point where industrial rents exceed suburban office rents for the first time in some areas. For markets like Montreal and Toronto, it was inevitable; flat suburban office rents combined with industrial growing 40+% a year during the pandemic. It doesn’t take long for industrial rents to exceed suburban office, and we’re probably just getting started – the disparity will get larger in the next year or two.

So what does this mean for development, investment, leasing? Could there be office-to-industrial conversions? As crazy as that sounds, it’s a discussion that’s happening: everyone from NAIOP to Prologis to Newmark have explored the possibility recently.

But the local market context matters. Vancouver is known for having the highest industrial rents in the country... and also the highest suburban office rents. The gap is still fairly large in Vancouver, despite a hot industrial market in BC. Vancouver leads the country in new suburban office development, despite those high industrial rents.

One more thought: could cities with low levels of return-to-office also see more demand for ecommerce as everyone stays home? Is it possible that work-from-home drives both more industrial demand and less office leasing? Is that why Ottawa is seeing the biggest deficit?

Suburban Office Rent Premium Over Industrial Graph

Summary
Industrial asking rents now exceed suburban office rents in Montreal, Ottawa and the GTA.

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Pour plus d’informations, veuillez contacter:

Adam Jacobs

Head of Research | Canada

Toronto Downtown

Colliers Canada's head of research, leading a cross-country team of 20 mapping, analytics and research professionals. Formerly head of Canada research at Cushman Wakefield and Director of Analytics at Oxford Properties. Featured in mainstream publications such as the Toronto Star, industry publications and podcasts. Specializing in the big picture and the fundamentals driving real estate - demographics, the macro environment and the global economy. 

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