Commercial activity gains in GTA amid strong economy

The future is looking positive for the commercial real estate market in the Greater Toronto Area.

Members of the Toronto Real Estate Board’s Commercial Network reported a 3.6% rise in leasing in July, with approximately 2.1 million square feet of industrial, commercial/retail and office space leased through the MLS.

Offices saw transactions rise by more than a third and the amount of office space leased has almost doubled from July 2017 levels. Industrial accounted for more than two thirds of leased space but saw a 41% decline in transactions year-over-year.

The average industrial lease rate was down from $7.49 in July 2017 to $7.25 in July 2018. The average commercial/retail lease rate was also down from $27.74 in July 2017 to $20.12 in July 2018. The average office lease rate was up from $12.43 in July 2017 to $14.85 in July 2018.

“The economy of the Greater Toronto Area continues to be strong. We have low unemployment, with job creation in many sectors of the economy. The latest GDP figures for Canada were also positive. With this in mind, it is not surprising that the amount of space leased this past July was up compared to the same time last year,” said TREB president Garry Bhaura.

Sales ease but prices rise
Sales in the sector (where prices were disclosed) were lower in July compared to a year earlier.

Industrial sales totalled 8, down from 19 in July 2017; there were 10 office sales (12 in July 2017); and commercial eased from 19 to 18.

Prices increased though for commercial (up 26% to $356.32 psf) and industrial (up 13.4% to $213.56 psf). For offices, prices declined 16.3% to $216.13 psf.

Optimistic for future
Mr Bhaura says that the long-term future of the GTA market remains positive.

“I am optimistic that the GTA will remain a destination for new companies and new households over the long-term, despite the potential for short-term economic volatility due to trade concerns,” he said.