Demand for industrial real estate soaring in Canada: report

Cushman-Wakefield-oil-prices-Canadian-dollar-industrial-distribution-centre-real-estate-Condo.ca

Falling oil prices and a weakening Canadian dollar helped drive the industrial real estate market in Canada to record-breaking growth in 2015, and 2016 will be another “banner year,” according to a report from global real estate services firm Cushman & Wakefield. The report hails a “new era” in industrial real estate, as markets like Toronto and Vancouver experience “explosive” growth and shrinking vacancy rates. The expansionary momentum has been so great that there are now shortages of premium industrial space available in some markets, especially Toronto. Even Calgary has continued to absorb industrial space, despite the magnitude of the energy “bust” on the city’s downtown office market.

Toronto is the third-largest industrial market in North America, the report says, with 778 million square feet of industrial space. The city absorbed a “remarkable” 9.1 million square feet in 2015, the strongest growth since pre-recession days in 2008 and more than half of the total in Canada. Across Canada, markets absorbed 17.8 million square feet of industrial space. It was the strongest national performance since 2005.

Demand for industrial space, fueled by low energy prices, rock-bottom interest rates, and robust U.S. demand for Canadian goods and services was the unexpected story of 2015. Growth in Vancouver and Toronto has been stimulated by a rapidly evolving e-commerce sector and related warehouse and distribution demand, along with strengthening export and manufacturing sales.

The demand is being driven by five factors, says Cushman & Wakefield. There are the three “lows”—low energy costs, low interest rates and a low (competitive) Canadian dollar. Together, these three factors support Canada’s exports, just as the Bank of Canada and others have been saying all along. The fourth factor is high demand in the US. As an energy-consuming region with strong export ties to the US, Toronto is in an almost ideal position to take advantage of these favourable conditions. The report reminds us that January 2016 saw record-high manufacturing sales in Canada, largely driven by food, cars, and car parts. Most of that manufacturing strength is located within an hour or two of Toronto.

Cushman-Wakefield-oil-prices-Canadian-dollar-industrial-real-estate-Condo.ca
Source: Cushman & Wakefield

The fifth factor at work is the growth of e-commerce. This is becoming increasingly important for consumers, and is fueling demand for larger warehouse and distribution facilities, especially near US cities. In order to keep up with demand and provide optimized delivery services, these facilities must be well located and automated with state-of-the-art technologies, the report says. That strong US demand is further motivating companies to deliver their products “at record speed.”

This year, Toronto is expected to “roar,” as will Vancouver and Montreal. Industrial markets will tighten even more, new developments will be built, and there will be upward pressure on rental rates, the report predicts.

Did you miss this?

Other Popular Stories

  • Swiss tech does the impossible, creates white solar panels
  • Government wants to know what chemicals are used in fracking
  • Beam me up, Scotty. Teleportation is small step closer: researchers transport photon 500 kilometers: Micius satellite
  • Audit pans government's climate change progress
  • Drivers want hydrogen-fueled cars says Hyundai
  • PPG Industries expands NA presence with $1 billion coatings takeover
  • GE increasing its investment in fracking technology
  • BC sees 100,000 LNG jobs, $1 trillion in revenues
  • Engineers use captured carbon to create new form of concrete
  • Jobs that are at risk of automation — and jobs that are not
  • Lower Model 3 prices can't prevent Tesla's slide by 3% after deliveries fail to impress; Tesla opens orders to Europe and China
  • Conditional approval for Northern Gateway pipeline
  • TransCanada's Keystone XL pipeline clears last hurdle in $10 billion project as Nebraska approves 3 to 2
  • Honda Canada makes its 7-millionth car, a Civic EX Sedan
  • Ford’s 347 kph GT: World's fastest supercar a testbed for new automotive technology
  • Chrysler Pacifica Hybrid, first electric minivan, rolls out in Windsor
  • GTA food and beverage manufacturers launch Cluster to spur growth
  • Tesla phenomenon will change both how cars are imagined and sold
  • "Fireworks" in Canada's economy as GDP rises 2.3 per cent in January
  • U.S. and Mexico resume talks for NAFTA auto agreement — door open for Canada to return to negotiations
Scroll to Top