TORONTO, June 5, 2013 -- Toronto Real Estate Board (TREB) Commercial Division Members reported a combined 449,649 square feet of industrial, commercial/retail and office space leased through the TorontoMLS system in May 2013. This result, which was based on space leased on a per square foot net basis with pricing disclosed, represented a dip of approximately 20 per cent in comparison to May 2012.
The average lease rate for industrial transactions, which accounted for approximately three-quarters of total leased space, was $5.26 per square foot net. This represented an increase of 4.7 per cent compared to May 2012.
“Average industrial lease rates for TorontoMLS transactions have increased quite strongly on a year-over-year basis so far this year and May was no exception. The trend for industrial lease rates seems to have followed growth in related sectors of the economy. The most recent figures for Canadian Gross Domestic Product indicate that the rate of GDP growth exceeded expectations and the export sector was the driver of growth. Exports are extremely important to the industrial market segment,” said TREB Commercial Division Chair, Cynthia Lai.
There were a combined 60 industrial, commercial/retail and office sales in May 2013 for which pricing was disclosed – down from 76 transactions in May 2012. The change in the average selling price per square foot varied by property type. The average industrial selling price was down on a year-over-year basis, whereas the average commercial/retail and office selling prices were up.
The decline in the average industrial price was due largely to a change in the geographical location of large industrial transactions this year compared to last.
Some of the average commercial/retail and office selling price increases were likely due to tighter market conditions in some segments, but there was also a compositional component to the reported price growth as well. For example, the average selling price for office properties in May was influenced by the fact that no large office properties (over 5,000 square feet) changed hands through the TorontoMLS system this year, which contributed to the increase in the average selling price. Larger office properties tend to sell for less on a per square foot basis.
“The pace of economic growth, especially as it relates to exports and business investment, is expected to increase through 2013. It is reasonable to assume that the pace of commercial transactions will strengthen moving forward as well,” continued Ms. Lai.
May 2013: Per Square Foot Net Commercial Leasing Summary
Lease Transactions Completed on a Per Square Foot Net Basis with Pricing Disclosed on TorontoMLS
Leased Square Feet
Average Lease Rate
Source: TREB Commercial Division
May 2013: Commercial Sales Completed with Pricing Disclosed on TorontoMLS
Sales (Price Disclosed)
Avg. Sale Price Per Sq. Ft. (Pricing Disclosed)