GTA REALTORS® Report Commercial Market Figures: Industrial and commercial/retail lease rates were down

Average office lease rates were up to $15.33 per square foot net

Toronto Real Estate Board President Paul Etherington announced that, in October 2014, TREB Commercial Network Members reported leases for 704,582 square feet of combined industrial, commercial/retail and office space within the TREB market area for which pricing was disclosed on a per square foot net basis. This result was up by 38.8 per cent compared to 507,501 square feet of combined space leased in October 2013. Almost 75 per cent of total leased space was accounted for by the industrial market segment.

Year-over-year changes in average lease rates were mixed in October. Industrial and commercial/retail lease rates were down to $4.96 per square foot net and $21.02 per square foot net respectively. In contrast, average office lease rates were up to $15.33 per square foot net. It is important to note that year-over-year price changes on monthly data reflect both market-based price changes as well as changes in the type and location of properties leased.

“Demand for commercial real estate, whether for lease or for sale, is obviously very dependent on business’ outlook for the economy. The fact that the amount of leased space was up this past October compared to the previous year could suggest that some businesses are expecting an increase in demand for the goods or services they produce. This could be seen as a positive indicator for demand in the GTA moving forward,” said Mr. Etherington.

“However, it is important to be mindful of the fact that there has been some economic volatility in some parts of the world which has, in turn, resulted in volatility in financial markets. It is possible that this could impact some business’ real estate decisions,” continued Mr. Etherington.

There were 54 industrial, commercial/retail and office property sales in October. This result represented a decline compared to 73 sales reported during the same month in 2013. Of the three major segments, industrial properties accounted for the greatest share of sales, at 42.6 per cent.

Average sale prices, on a per square foot basis for transactions with pricing disclosed, were down for industrial and commercial/retail properties and up for office properties. Similar to the leasing market, average price changes can be the result of both market forces and changes in the type and location of properties sold.