The Greater Toronto Area (GTA) industrial market remains a hotbed of activity, as strong momentum from 2021 carried forward into the first quarter of 2022, led by high demand and limited supply.

New building completions during the quarter did not influence the availability rate, as 91% of the new space was leased prior to completion. Current market conditions favour landlords, and rental rates continue to rise rapidly. With 66 million square feet (msf) in the development pipeline for the next three years (under construction and pre-construction), rising availability will likely provide more space options to a broader spectrum of industrial tenants compared with today’s constrained supply environment. GTA-wide, the availability rate stabilized at 0.9% (unchanged quarter-over-quarter) – this on the heels of a steady decline from a high of 7.1% in first-quarter 2010. Leasing demand over the past five quarters for spaces 10,000 square feet (sf) or greater has been dominated by logistics and distribution (31%), manufacturing (20%) and retail/e-commerce (18%) tenants. The majority of investor demand for spaces 10,000-sf and greater during the same time frame was driven by private investors (57%), followed by institutional investors (20%) and users (17%).

Rental rates have grown by 16% quarter-over-quarter, 94% in the past three years, and 104% in the past five years. Low availability rates have offset the high land values and construction costs evident in today’s market. Given the supply-demand imbalance, the consensus is for continued growth across the GTA industrial market for the foreseeable future.