In anticipation of a stronger economy in the next year, businesses in the Greater Toronto Area are driving a surge in industrial leasing activity.
The increase in leased industrial space in the GTA rose 31 per cent on a year-over-year basis to more than 4.6 million feet. In the third quarter of 2013, industrial space accounted for 80 per cent of total space leased.
“The annual growth in the amount of space leased in the third quarter, particularly in the industrial market segment, suggests that businesses in the Greater Toronto Area are expecting stronger growth over the next year,” she said in a statement.
“In anticipation of more robust economic activity, many of these businesses have taken on more space in order to account for increased demand for their goods or services moving forward.”
Although interest in leased industrial space was hot, sales were not. Sales of industrial space fell by 22 per cent over the quarter. At the same time the average price of industrial space during the quarter rose 27.8 per cent from $71.08 to $90.83, which could indicate a scarcity of space for purchase.
Commercial leased space in the GTA was up by 23 per cent in the third quarter, rising from 4.7 million to 5.8 million square feet.
Combined sales of industrial, commercial and office property remained virtually unchanged to the 283 sales reported at the same time last year. The commercial/retail segment showed the strongest growth, with the number of deals up by 25 per cent over the previous year.
Average disclosed selling prices reported on a per-square-foot basis increased over last year for all major property types. Commercial square foot selling prices jumped 63.1 per cent from $119.30 in Q3 2012 to $194.57 in Q3 2013.
Lai attributed the overall increase in property price to an increase in demand for commercial/retail and office space in particular and to a change in the geography and size of properties sold in 2013 compared to 2012.
“For example, this year there were a higher percentage of smaller commercial/retail properties sold,” Lai said. “All else being equal, smaller properties tend to sell for more on a per-square-foot basis than larger properties.”
Housing sales up 30% over last September but down year to date over 2012
Meanwhile, the TREB’s monthly resale housing figures show a 30 per cent increase in home sales in September 2013 compared to a year ago.
GTA realtors reported 7,411 residential sales in September 2013 compared to 5,687 transactions in September 2012. Year to date, however sales are down one per cent.
TREB president Dianne Usher said the numbers indicate households still find the cost of home ownership, including mortgage payments, affordable. “This is why the third quarter was characterized by renewed growth in home sales in the GTA,” Usher said in a release.
Average selling price for September transactions came in at $533,797, up 6.5 per cent over the previous year.
Jason Mercer, the TREB’s senior manager of market analysis, said the demand in September continued to be for low-rise homes, coupled with a short supply of listings.