TORONTO, June 4, 2014 -- Toronto Real Estate Board Commercial Network Members reported 639,878 square feet of combined industrial, commercial/retail and office space leased through the TorontoMLS system in May 2014, on a per square foot net basis where pricing was disclosed. This result was up from 436,433 square feet leased in May 2013 and represented a 47 per cent increase on a year-over-year basis, which was driven by all major market segments.
The industrial leasing market segment accounted for approximately 72 per cent of space leased. The average lease rate for these transactions was up by 1.5 per cent to $5.30 per square foot net. The commercial/retail and office segments experienced stronger average rates of growth, but a lot of this growth was compositional in nature, including a different mix of unit sizes and geography of transactions compared to May 2013.
“Despite slower than expected economic growth to start 2014, we experienced a considerable uptick in the amount of space leased. The consensus view is that the slow first quarter GDP growth in Canada and south of the border was mainly due to extreme weather. The expectation is for an acceleration in US economic growth moving forward, which should have a positive effect on the Canadian economy, particularly where exports are concerned. Many GTA businesses arguably subscribe to this view and were taking on space in May in anticipation of stronger demand for their goods and services,” said Commercial Committee Chair Cynthia Lai.
There were 50 combined industrial, commercial/retail and office property sales reported in May 2014 – down by approximately 30 per cent in comparison to May 2013. The average selling price per square foot, for transactions where pricing was disclosed, was up on a year-over-year basis for the industrial and commercial/retail segments of the market and down for the office segment.
The key reason for the strong increases in the average industrial and commercial/retail selling prices was the lack of deals for larger sized properties this year. Generally speaking, larger properties sell for less on a per square foot basis compared to smaller properties.
“Looking forward, low borrowing costs coupled with the anticipated increase in the demand for Canadian exports should fuel commercial real estate purchases in the GTA. It will be important to watch second quarter economic data, especially as it relates to business confidence and willingness to invest in the second half of 2014,” continued Ms. Lai.
May 2014: 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 2014: Commercial Sales Completed with Pricing Disclosed on TorontoMLS
Sales (Price Disclosed)
Avg. Sale Price Per Sq. Ft. (Pricing Disclosed)