E-commerce has pushed this asset class to the forefront
With the flourishing of the e-commerce space amid the pandemic, Canada’s industrial property market continues to benefit from a sustained appetite for warehouses, according to commercial real estate firm CBRE.
In Q3, the Canadian industrial market reached two crucial data points: a national availability rate of 2% (down by 30 basis points quarter over quarter), and an average asking rent of $10.03 per square foot (up by $0.21), CBRE said.
“Demand for distribution and logistics warehouses remains at an all-time high,” CBRE said. “Exacerbated by the record level of demand, and the increasing supply-demand imbalance in most markets, rents have increased by 34.5% nationally over the last three years.”
The greatest growth in rents during this period was registered in Toronto (74.1%), Montreal (56.2%), and London (50.7%).
“Several markets have, for all intents and purposes, run out of space,” CBRE said. Vancouver, London, Waterloo Region, and Toronto all had availability rates of 0.9% or lower during the third quarter, with Montreal coming close at 1.2%.
While a faster pace of development is the only workable solution in the long term, CBRE said that the market situation is aggravated by supply-chain disruptions, bloated construction timelines, and scarcity of developable land.
“The current 34.1-million sq. ft. development pipeline will only increase existing inventory by 1.8% and projects slated for delivery through to year-end 2022 are already 63.4% pre-leased,” CBRE said.