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TORONTO, December 3, 2015 — Toronto Real Estate Board President Mark McLean announced TREB MLS® commercial real estate results for November 2015. There was 428,741 square feet of combined industrial, commercial/retail and office space leased, on a per square foot net basis with pricing disclosed, during the month. This result represented a year-over-year decline of 8.8 per cent. As is generally the case with leasing transactions reported through TREB’s MLS® system, industrial properties accounted for the great majority of space leased, with firm deals reported for 295,133 square feet.
The average industrial lease rate was $ 5.41 per square foot net – up by 2.2 per cent year-over-year. The average lease rate for commercial/retail transactions was $ 14.39 per square foot net – down by 37.1 per cent annually. This decline was largely due to the lease of a very large property at a lease rate well below the normal average, as is often the case for larger properties. The average office property lease rate, at $ 12.10 per square foot net, was down by 8.9 per cent compared to November 2014.
“While we did receive some good economic news recently, with renewed growth in the Canadian economy in the third quarter, it would seem that some businesses may still be somewhat hesitant to undertake any major new investments in real estate,” said Mr. McLean.
“It was encouraging to see that the third quarter growth in GDP was based in part on an uptick in exports, which was related to the lower value of the Canadian dollar compared to the US dollar. Exports are important to the economy in the GTA and southwestern Ontario more broadly. If we continue to experience positive results on the export front, we could see an increase in real estate investment as firms seek to increase capacity to meet demand,” continued Mr. McLean.
There was a total of 39 industrial, commercial/retail and office sales in November, for which pricing was disclosed – down from 71 deals in November 2014. Sale prices, on a per square foot basis, were down on a year-over-year basis for all three market segments.
“Notwithstanding the fact that some firms may have put their decision to purchase real estate on hold due to uncertain economic conditions this year, it is also important to point out that the sale of all types of commercial properties can be volatile on a month-to-month basis because many of these deals are quite complex and can take a significant amount of time to go firm. The dip in November sales could be offset with increases in the months ahead,” added Mr. McLean.