April 5, 2017 — Toronto Real Estate Board President Larry Cerqua announced that TREB Commercial Network Members reported 5,538,743 square feet of combined industrial, commercial/retail and office space leased through TREB’s MLS® System in the first quarter of 2017. This result was down on a year-over-year basis compared to 6,421,452 combined square feet of leased space reported in the first quarter of 2016. The majority of space leased was accounted for by the industrial segment of the market, within which agreements were reached for almost 3.9 million square feet, or 70 per cent of total space leased. Leased office space, at almost 942,000 square feet, followed by commercial/retail, at approximately 717,000 square feet, accounted for the balance of leasing activity.
The average industrial lease rate, for properties leased on a per square foot net basis with pricing disclosed was $6.39 – up from $5.20 in the first quarter of 2016. In Q1 2017, no large spaces (i.e. greater than 50,000 square feet) were reported leased through TREB’s MLS® System. Larger spaces generally lease for less per square foot, all else being equal. Therefore, the absence of large industrial leases in Q1 2017 accounts for much of the higher average lease rate.
“The first quarter of the year is generally a slower period for leasing activity and as such the mix of properties is not as diverse. As a result, it is possible to see some volatility in lease rates due to the changing composition of transactions from one year to the next. Looking forward, the outlook for the GTA economy is quite positive, which should see demand for commercial real estate remain strong in 2017,” said Mr. Cerqua.
The combined number of industrial, commercial/retail and office sales amounted to 234 in Q1 2017 – down from 326 in Q1 2016. The average selling price for transactions where pricing was disclosed was up for all three major market segments. Much of these price increases, however, was due to changes in the type, size and geography of transactions on a year-over-year basis.