Toronto Industrial Insight

Transcription

Industrial Insight Report
Greater Toronto Area | Q2 2016
Table of Contents
Greater Toronto Area Overview
1
Greater Toronto Area Map
2
Submarkets
Brampton
3
Burlington
6
Etobicoke
8
Milton / Halton Hills
10
Mississauga
12
Oakville
14
Vaughan
16
Statistics
18
Contacts
19
JLL | Greater Toronto Area | Industrial Insight | Q2 2016
Market Update
Greater Toronto Area | Q2 2016
Developers and landlords remain bullish as new construction pipeline continues
777,722,137
Pricing Demand
Supply
Lease activity
Although total leasing volume slowed in the second quarter, the Greater Toronto Area Key market indicators
(GTA) industrial market continued its momentum with 1.7M square feet of net
Total inventory (sf)
absorption in the second quarter despite 1.8M square feet of new construction
Total vacancy (%)
deliveries over the same period. Notably, there were only ten lease deals greater than
Total availability (%)
100,000 square feet and none of the existing big box developments in Milton or Halton
Q2 net absorption (sf)
Hills were leased this quarter. While leasing activity has slowed compared to the first
YTD net absorption (sf)
quarter, there are numerous tenants in the market such as Gordon Food Service,
Hopewell Logistics and Celestica looking for space greater than 100,000 square feet
Average rental rate (nnn)
with an aggregate requirement in excess of 1.5M square feet.
12-month rent growth
Source: JLL Research
Rents
Currently at $6.03 per square foot, average net rental rates continue their steady
march upwards, bolstered by vacancy and availability rates at record lows. The only
submarket where rental rates remained flat was the GTA East.
2.8%
3.7%
1,735,135
6,519,741
$6.03
2.6%
Arrows represent change from prior quarter
Net new supply, net absorption, vacancy
Sales and Construction
While users and investors alike are willing to purchase well situated buildings at
historically high prices, institutional owners remain reluctant to sell given the difficulty of
replacing assets in the current tight market. The $100M sale-leaseback of the Sears
Canada distribution centre to Metrus Properties and the $56M sale-leaseback of
Sobeys’ distribution centre to Crombie REIT are two major examples of users
capturing value from their real estate holdings in the current market while still retaining
the functional space they require for their business. There were twenty-nine investor
sales in the second quarter with an average price/sf of $112, representing a year over
year (YOY) increase of 10.2 percent. There were fifty-four user sales with an average
price/sf of $121 in the second quarter, a massive 57.1 percent YOY increase
highlighting the tightness of the sale market. Twenty-six projects – 19 on spec and 7
design-builds – totaling 7.7 million square feet are under construction in the GTA, with
4.3 million square feet on track to be delivered by the end of the year. Speculative
construction is booming in Halton Hills and Milton, with seven projects totaling 3.3 MSF
currently under construction, including 2.7 MSF of available speculative product set to
deliver by the end of 2016.
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
sf
Net new supply
Total vacancy
Net absorption
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Average rental rate
$6.20
$6.03
$6.00
$5.80
$5.60
$5.40
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
Economic outlook
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Canada ranked third globally in the 2016 Global Real Estate Transparency Index
compiled by JLL and Lasalle Investment Management*, further reinforcing Canada’s
image as a safe haven for capital in a turbulent global economy. The GTA is the third
largest industrial real estate market in North America after Chicago and Los Angeles*.
RECENT SALES COMPARABLES (sorted by square feet)
Buyer
Seller
Metrus Properties
Sears Canada
Location
9501-9601 Highway No. 50
Municipality
Vaughan
Size (sf)
994,942
Date
04-01-2016
Price / sf
$101
Crombie REIT
Sobeys Capital Incorporated
8265 Huntington Road
Vaughan
510,100
06-29-2016
$110
Dymon Storage
Mylex Furniture
1460 The Queensway
Etobicoke
344,716
05-02-2016
$56
RECENT LEASE COMPARABLES (sorted by square feet)
Tenant
Landlord
Orlando
A&P
Metrus
Crownhill Packaging
Orlando
Future Shop
*Global Real Estate Transparency Index
**City of Mississauga – Market conditions
Location
6175 Edwards Blvd, Mississauga
8905 Goreway Dr, Brampton
6110 Cantay Rd, Mississauga
Intersection
Kennedy/Edwards
Queen/Goreway
Cantay/Britannia
Size (sf)
244,995
208,147
181,178
JLL | Greater Toronto Area | Industrial Insight | Q2 2016 | Page 1
Property Clock
MARKET STATISTICS
Property type
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total
net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
481,069,496
3.1%
4.2%
1,082,573
5,012,834
$5.87
7,564,901
1,820,935
2,962,233
Manufacturing
189,274,337
1.9%
2.1%
477,870
799,177
$5.41
117,767
0
250,666
Total Industrial
777,722,137
2.8%
3.7%
1,735,135
6,519,741
$6.03
7,682,668
1,820,935
3,212,899
Brampton
Rents
Solid leasing fundamentals have seen average rental rates continue their
consistent upwards trajectory. Current construction projects are set to deliver
with asking rates in the low seven range.
Ten of the eleven market sales in Brampton this quarter were to users of
industrial space rather than investors, averaging a price per square foot of $116,
including two manufacturing buildings for the first time this year. Metrus
Properties’ 84,318 square foot multi-tenant speculative development at 545
Deerhurst Dr will be delivering 68.8% preleased in August. Orlando is currently
expanding 7825 Winston Churchill Blvd from 377,078 square feet to 799,809
square feet and will soon begin construction on a 219,078 square foot
speculative development at 7855 Heritage Road South, both of which will deliver
in the first half of 2017. Panattoni in conjunction with Artis REIT has begun
construction on 175 Westcreek Boulevard in the Westcreek business park, a
speculative 130,000 square foot big box development which is set to deliver in
Q1 2017.
Economic outlook
The City of Brampton benefits from an excellent transportation network,
competitive tax rates, and a predictable local government with an ‘AAA’ Standard
& Poor’s credit rating*. Brampton issued $82M worth of industrial building
permits in the period from January through May and added 78 new businesses**.
Supply
Key market indicators
Pricing Demand
Lease activity
Leasing activity remained steady in the second quarter, with consistent positive
net absorption driving down vacancy and availability rates. Metro Canada
Logistics, which had preleased 241,762 square feet of 9 West Drive prior to its
delivery early this quarter, expanded its footprint to lease the whole 454,040
square foot building. GWL’s recently delivered 3495 Steeles Ave E development
is still vacant, although GWL is reportedly close to signing a tenant for the space.
Carttera’s 899,330 square foot distribution building at 8875 Torbram which
delivered at the end of 2015 is still fifty percent vacant. There are currently six
properties greater than 100,000 square feet available on the Brampton market.
92,652,965
Total vacancy (%)
3.1%
4.5%
Total net absorption (sf)
926,469
1,919,446
$6.02
12-month dollar change
5.4%
2,000,000
1,500,000
1,000,000
500,000
sf 0
-500,000
Net new supply
Total vacancy
8.0%
Net absorption
6.0%
4.0%
2.0%
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Average rental rate
$8.00
$6.02
$6.00
$4.00
$2.00
$0.00
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Seller
Location
Intersection
Size (sf)
Date
Price / sf
The Taylor Group
Debro Steel GP Inc.
7 Blair Drive
174,668
06/24/2016
$59
Odomatic Inc.
Crosby Canada Inc.
145 Heart Lake Road South
77,880
06/29/2016
$114
Lo Curto Denison Square Inc
Arc Properties Ltd
45 Armthorpe Road
Hwy 410/Steeles
Queen St E/Hwy
410
Steeles/Goreway
42,579
04/28/2016
$110
Tenant
Landlord
Anatolia Capital
Metro Canada Logistics
Metrus
Crownhill Packaging
Bentall Kennedy
SDR Distribution Services
* Standard & Poor Brampton 2015
** Brampton Economic Indicators May 2016
Location
9 West Drive
8905 Goreway Dr
30 Pedigree Crt
Intersection
West/Steeles
Queen/Goreway
Steeles/Airport
Size (sf)
212,278
208,147
120,000
SUBMARKET
CHARACTERISTICS
High velocity
market for both
lease and sale
activity
Lack of available
land has prompted
numerous
redevelopment
projects
1
Numerous bulk
distribution spaces
The 3rd largest city
in the GTA
featuring CN Rail’s
largest intermodal
terminal
3
2
4
SUBMARKET STATISTICS
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
68,766,940
3.5%
5.4%
810,908
1,692,488
$6.04
1,013,858
454,040
613,840
Manufacturing
19,509,386
1.6%
1.6%
115,561
226,958
$5.89
-
-
-
Total Industrial
92,652,965
3.1%
4.5%
926,469
1,919,446
$6.02
1,013,858
454,040
613,840
Property type
Burlington
Rents
Lack of demand will likely keep rental rates stable in Burlington despite low
vacancy and availability rates.
Supply
Pricing Demand
Lease activity
After a strong finish to 2015, Burlington has now posted negative net absorption
two quarters in a row for the first time in three years although vacancy rates still
sit at a relatively healthy 4.7 percent. Smaller lease sizes make up the majority
of lease activity in Burlington, with twenty-four of the twenty-seven lease
transactions recorded in the second quarter being smaller than 20,000 square
feet.
23,710,352
Total vacancy (%)
4.7%
6.5%
(84,368)
(114,185)
$5.35
7.3%
300,000
Users acquiring manufacturing facilities accounted for three of the four market
sales in the second quarter with an average sale price of $92 per square foot.
The only investor purchase was the Thomson Metals and Disposal property
which forms a contiguous scrap yard and recycling facility. With the April 2016
delivery of 1105 Clay Ave, Fengate’s multi-tenant 67,000 square foot fully
preleased speculative property, there are no current construction projects
ongoing in Burlington.
200,000
Net new supply
Total vacancy
8.0%
Net absorption
6.0%
100,000
4.0%
sf 0
2.0%
-100,000
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Average rental rate
Economic snapshot
Burlington contains a higher ratio of dated industrial buildings but benefits from
its proximity to the port of Hamilton and low municipal tax rates and development
charges. The four key sectors in Burlington are advanced manufacturing,
financial and business services, life and earth sciences, and ICT*. While
Burlington’s population growth has been consistent with other municipalities in
the region, it has the oldest median age in the Halton and Peel regions at 41.8
years old** as of the 2011 census.
$6.50
$6.00
$5.35
$5.50
$5.00
$4.50
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Seller
Location
Intersection
Size (sf)
Date
Accurcast Inc
An individual
2247 Harold Road
QEW/Guelph Line
27,250
05/06/2016
$59
Total Casing Service Inc
732182 Ontario Ltd
Harvester/Burloak
17,995
05/13/2016
$110
1953317 Ontario Ltd
Thomson Metals and
Disposal
5510 Harvestor Road
961 Zelco Drive
971 Zelco Drive
4425 South Service Road
QEW/Appleby Line
12,300
06/03/2016
$81
Type
Landlord
Harvester Group
New
PIRET
Renewal
Bentall Kennedy (Sun Life)
New, Sublease
* BEDC Invest Profile
**Statistics Canada, National Household Survey (NHS) Profile, 2011 National Household Survey,
Statistics Canada Catalogue no. 99-004-XWE
Location
1770 Appleby Line
2247 Harold Rd
3100 Harvester Rd
Intersection
Appleby Line/Upper Middle
Guelph Line/Mountainside
Guelph Line/Harvester
Price / sf
Size (sf)
76,960
26,000
15,059
SUBMARKET
CHARACTERISTICS
Low velocity
market for both
lease and sale
activity
Ninety-four percent
of all industrial and
flex properties are
located within two
kilometers of
Highway 403
1
Limited bulk
distribution spaces
Well educated and
diversely skilled
workforce
3
4
2
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
15,658,068
3.5%
5.0%
15,270
75,489
$5.38
-
67,749
67,749
Manufacturing
3,519,910
6.3%
9.3%
(77,948)
(80,298)
$4.89
-
-
-
Total Industrial
23,710,352
4.7%
6.5%
(84,368)
(114,185)
$5.35
-
67,749
67,749
Property type
Etobicoke
Rents
Etobicoke benefits from its proximity to the Toronto core and to the Pearson
International airport but the lack of new construction is keeping rental rates
stable.
There were seven user sales greater than 10,000 square feet with an average
price per square foot of $110 and three investor sales with a price per square
foot of $55. The largest sale in Etobicoke was the $19.5M purchase of the
344,716 square foot manufacturing facility at 1460 The Queensway in a
redevelopment play by Dymon Storage, an upscale self storage company based
out of Ottawa. The Etobicoke location is the second of eighty storage facilities
Dymon plans to build in the GTA over the next ten years, having also acquired a
two acre development site in Brampton in January. Although Dymon plans to
redevelop the 1460 The Queensway site into up to a 500,000 square foot storage
facility, there are no current construction projects ongoing in Etobicoke.
Economic outlook
Etobicoke contains a high ratio of dated industrial product with low clear heights
and restrictive shipping design layouts. Despite this there has been no new
construction or infill redevelopment for the last two years. Etobicoke will benefit
from its infill location close to the Toronto core as self storage companies such
as Dymon Storage and U.S. based Strategic Storage Trust II attempt to position
themselves close to population clusters.
Supply
Pricing Demand
Lease activity
Etobicoke is posting one of the lowest vacancy rates in the GTA after net
absorption has steadily increased over the last three quarters. With no new
speculative construction over the past two years, modern distribution facilities
remain elusive. There are currently three properties available for lease over
100,000 square feet, all with clear heights of less than twenty-two feet.
65,283,344
Total vacancy (%)
2.0%
5.1%
278,783
549,436
$5.67
10.1%
400,000
4.0%
200,000
3.0%
sf 0
2.0%
-200,000
1.0%
Net new supply
Net absorption
Total vacancy
-400,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
0.0%
Average rental rate
$8.00
$5.67
$6.00
$4.00
$2.00
$0.00
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Seller
Location
Intersection
Size (sf)
Date
Price / sf
Dymon Storage
Mylex Furniture
Gardiner/Kipling
344,716
05/02/2016
$56
Gramercy Property Trust
AGNL KIK Enterprises Inc
1460 The Queensway
2000 Kipling Avenue &
13 Bethridge Road
Kipling/Rexdale
267,299
04/27/2016
$70
Dynevor Express Ltd
L-3 Communications
Electronic Systems Inc
19 City View Drive
Hwy 27/Dixon
93,514
06/23/2016
$31
Transaction Type
Landlord
1413943 Ontario Inc.
New
New
New
Mantella Corporation
KingSett Capital
Location
230 New Toronto St
Intersection
Size (sf)
Kipling/Horner
75,900
70 Carson St
22 Huddersfield Rd
Horner/Carson
Humberline/Huddersfield
25,333
22,248
SUBMARKET
CHARACTERISTICS
Older industrial
stock with lower
clear heights and
constrained
shipping yards
Adjacent to
Pearson
International
Airport in the West
and the Toronto
Core to the East
1
Higher ratio of
smaller and midsized
manufacturing
2
Vast labour pool
and public transit
amenities
3
4
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
30,415,347
2.2%
5.2%
123,531
267,650
$5.97
-
-
-
Manufacturing
27,585,765
1.5%
4.9%
87,801
172,527
$5.31
-
-
-
Total Industrial
65,283,344
2.0%
5.1%
278,783
549,436
$5.67
-
-
-
Property type
Rents
The higher rents commanded by quality new construction in this area of lower
inventory are having a much larger effect on the average rental rate compared to
other submarkets but have remained steady from last quarter.
There were only two market sales in Milton and Halton Hills, which is inline with
normal activity for this lower velocity sales market. Vacancy rates look set to
spike further as there will be 2,743,283 square feet of available speculative
product delivering by the end of 2016. The only current project in Halton Hills is
Broccolini’s 639,839 square foot Gateway Distribution Center at 11400 Steeles
Ave. East, on the border of Milton just North of Highway 401. Triovest has plans
in place to begin construction on 2 Cleve Court in Halton Hills, a 564,824 square
foot speculative project that will be built in two phases and is expected to deliver
by the end of 2017.
Economic outlook
Milton has decreased its industrial development charges within the Town of
Milton to $3.03 per square foot*. Milton is the fastest growing community in
Canada with a 56.5 percent growth rate**. The Canadian National Railway
Company (CN) is currently undergoing an environmental assessment of its’
planned $250 million intermodal and logistics hub which will be built along the
main CN line in the southwest portion of urban Milton, on a 400-acre parcel of
CN owned land***.
Supply
Pricing Demand
Lease activity
Milton and Halton Hills recorded no lease transactions over ten thousand square
feet in the second quarter. With Milton’s recent explosion of speculative big box
construction there are only three freestanding properties available for lease in
the 20,000 to 100,000 square foot range but twelve available in the 100,000
square foot and greater range. Although there are numerous 100,000 square
foot plus tenants in the market, large corporate occupiers have delayed in
committing to space. With no new leases this quarter and the development
pipeline continuing to deliver speculative big box properties the vacancy and
availability rates in this node are the highest in the GTA West.
23,218,452
Total vacancy (%)
9.4%
20.5%
65,876
370,035
$6.55
10.6%
1,000,000
Net new supply
Total vacancy
500,000
sf
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Net absorption
0
-500,000
-1,000,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Average rental rate
$8.00
$6.55
$6.00
$4.00
$2.00
$0.00
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Seller
Location
Intersection
Size (sf)
Date
Price / sf
Bid Express Ltd
Sl Special Laboratories
Williamson Real Estate
Holdings Ltd
290 Bronte Street South
Bronte/Derry
22,150
05/09/2016
$169
102 Armstrong Avenue
Guelph/Mountainview
16,099
06/30/2016
$124
2520705 Ontario Inc
* Town of Milton – Development Charge Rates
**Miltonthiswayup – Milton Fast Facts
** CN Rail Proposal: Milton Logistics Hub
SUBMARKET
CHARACTERISTCS
Almost exclusively
warehousing and
distribution
properties
Speculative
building boom
along the Highway
401 corridor
1
2
Proposed site of
new CN rail
intermodal
logistics hub
Fastest growing
community in
Canada with a
projected labour
force of 81,106 by
2021
3
4
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
19,270,421
9.9%
22.8%
81,228
388,087
$6.63
3,285,201
561,607
920,948
Manufacturing
3,247,052
6.1%
9.9%
(15,352)
(19,652)
$4.57
-
-
-
Total Industrial
23,218,452
9.4%
20.5%
65,876
370,035
$6.55
3,285,201
561,607
920,948
Property type
Mississauga
Lease activity
Although year to date net absorption remains a healthy 959,622 square feet, the
second quarter did see negative net absorption of 318,948, leading to a slight
easing of vacancy rates. This may indicate that this higher velocity leasing and
sales node is approaching its equilibrium point as absorption has swung back
and forth over the past year.
Rents
Rental rates continued to rise in Mississauga as underlying market fundamentals
remained steady. Prologis is leading the market with asking rates of $7.50 for its
distribution facility at 7385 Bren Rd in the Prologis Pearson Logistics Center.
There were eleven user sales and two investor market sales with an average
price per square foot of $148 and $93 respectively. The largest construction
project underway is the 450,000 square foot Orlando design build for Unisource
Canada on 125 Madill Boulevard. Orlando is also behind the only other current
construction project underway, the 183,258 square foot speculative development
at 3075 Carravelle Dr, which is slated to deliver by the end of the year. With the
rising cost and scarcity of developable land in the GTA, Orlando plans to
redevelop and modernize any dated facilities in its extensive portfolio of “center
ice” in locations such as Mississauga and Brampton, rather than moving into
tertiary markets. Panattoni has broken ground but hasn’t officially begun
construction on 2020 Logistics Drive, a big box speculative development up to
765,000 square feet in size and with a clear height ranging to forty feet.
Economic outlook
With a population of 757,000 as of 2014, Mississauga is the second largest city
in the GTA by population and it has the largest industrial inventory in the region*.
Mississauga has 15.2% of its 29,212 hectares devoted to industrial land, but this
percentage will likely not rise much further as in the period of 2010-2016 the city
only added six hectares of industrial land**. In the period from January to April of
2016 the only building permit issued was for 3185 American Dr, an 124,183
square foot speculative development by Orlando Corporation***.
Pricing Demand
Supply
170,096,495
Total vacancy (%)
3.5%
4.4%
(318,948)
959,622
$6.13
4.1%
1,500,000
1,000,000
500,000
sf 0
-500,000
-1,000,000
6.0%
4.0%
2.0%
Net new supply
Net absorption
Total vacancy
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
0.0%
Average rental rate
$6.20
$6.13
$6.00
$5.80
$5.60
$5.40
$5.20
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Kingsett Capital
Seller
Location
Intersection
2433226 Ontario Ltd
Mermaid Investments Ltd
Innovative Trailer Design
Industries
Bell Lifestyle Products
3155 Pepper Mill Investments 3155 Pepper Mill Court
Tenant
Landlord
Orlando
A&P
Orlando
Future Shop
Orlando
Delmar Logistics Inc
* City of Mississauga – Population, Demographics & Housing
** City of Mississauga – 2016 Existing Land Use
***City of Mississauga – New Industrial & Commercial Building Permits
Size (sf)
Date
Price / sf
1290 Blundell Road
Dundas/Dixie
97,550
05/26/2016
$64
1770 Britannia Road East
Hwy 401/Dixie
Hwy 403/Winston
Churchill Blvd
66,486
04/01/2016
$113
41,498
05/30/2016
$125
Location
6175 Edwards Boulevard
6110 Cantay Road
600 Suffolk Ct
Intersection
Kennedy/Edwards
Cantay/Britannia
Cantay/Mclaughlin
Size (sf)
244,995
181,178
133,363
SUBMARKET
CHARACTERISTICS
Higher ratio of bulk
distribution and
warehousing
spaces compared
to other GTA
industrial
submarkets
Contains Pearson
International
Airport and access
to all major
transportation
arteries
1
Strong labour pool
and public transit
amenities
Second largest
population base in
the GTA after the
City of Toronto
3
4
2
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
116,122,596
3.4%
4.3%
(279,912)
1,075,585
$6.15
633,258
70,227
70,227
Manufacturing
32,589,920
3.8%
4.0%
21,266
1,242
$5.31
-
-
-
Total Industrial
170,096,495
3.5%
4.4%
(318,948)
959,622
$6.13
633,258
70,227
70,227
Property type
Oakville
Lease activity
Oakville reversed the negative net absorption of the previous quarter by posting
positive net absorption of 51,069 square feet which included tenants vacating
33,101 square feet of sublet space. The only lease deal greater than 10,000
square feet was Integra LifeSciences leasing 22,633 square feet in 2590 Bristol
Circle in the Winston Business Park.
Pricing Demand
Supply
Rents
Oakville’s rental rate of $6.46 is inflated by the large number of smaller industrial
properties with higher rents.
23,690,939
Total vacancy (%)
3.5%
7.9%
51,069
4,549
$6.46
1.4%
There were only two market sales in Oakville in the second quarter, with the
investor sale of 2908 & 2924 Portland Dr. recording a cap rate of 3.7 percent on
two fully occupied income producing properties built in 1999. Oakville has
averaged three 10,000 square foot plus market sales per quarter for the past
three years, with the previous quarters’ outlier of eight sales being inflated by self
storage portfolio purchases. Blackwood Partners have phase three of their Great
Lakes Business Park at 3421 Superior Ct under construction, a 95,666 square
foot flex building which should deliver by the end of the year. Melrose
Investments has finished earthworks but has not yet started construction on 3266
South Service Rd building A, a 100,000 square foot manufacturing building
which should deliver midway through 2017.
Economic outlook
Total development charges have increased to $21.58 per square foot within the
Oakville built boundary, the highest in the Halton region*. Oakville appeals to
employers looking to provide work-life balance; the key industries are advanced
manufacturing, life sciences, professional services, and digital media and
animation*.
200,000
100,000
sf 0
-100,000
Net new supply
Net absorption
-200,000
Total vacancy
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Average rental rate
$7.00
$6.46
$6.50
$6.00
$5.50
$5.00
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Buyer
Seller
Fedar Investments Ltd
Babel Investments Ltd
Location
2908 Portland Drive &
2924 Portland Drive
Westport Auto
Edsco Construction Ltd
1393 Wallace Road
Tenant
Landlord
K. Tool & Die
Integra Canada
*Oakville- ecdev- Annual Report
Intersection
Dundas/Winston
Churchill Blvd
46,282
06/17/2016
$163
QEW/Third Line
17,810
04/28/2016
$112
Location
2590 Bristol Circle
Size (sf)
Intersection
Bristol/Winston Park
Date
Price / sf
Size (sf)
22,633
SUBMARKET
CHARACTERISTICS
Warehousing and
distribution
facilities
concentrated along
Hwy 403 corridor
Limited modern
distribution
product
1
Lower velocity
market for both
lease and sale
Well educated and
available workforce
3
2
4
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
15,331,451
4.7%
8.4%
(39,538)
127,707
$6.40
-
-
57,760
Manufacturing
5,720,752
1.0%
1.5%
-
-
$6.20
-
-
-
Total Industrial
23,683,500
3.5%
7.9%
(46,520)
184,592
$6.38
95,666
-
57,760
Property type
Vaughan
Lease activity
Net absorption continued to pick up in steam in the second quarter with the only
speculative construction which has delivered so far this year, 625 Zenway
Boulevard phase 1, coming to market fully preleased. Average lease sizes
remain small with only seven leases greater than 20,000 square feet recorded in
the second quarter out of a total of sixty-eight.
Pricing Demand
Supply
Rents
Rental rates continue to rise with asking rates for new construction ranging
between $6.50 and $6.95.
Jan K. Overweel Ltd
Sears Canada Inc
Sobeys Capital Inc
106 Aviva Park Drive
Investment Ltd
Transaction Type
Landlord
Zzen Group
New
Metrus Properties
New
Quality and Company
New
2.6%
4.3%
913,353
1,423,371
$6.08
1,000,000
800,000
600,000
400,000
200,000
0
sf
Net new supply
Total vacancy
Net absorption
4.0%
3.0%
2.0%
1.0%
0.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Economic outlook
The city of Vaughan issued forty seven industrial building permits with a value of
$19.2M in the period from the beginning of 2016 till March 31st, roughly on par
with the same period in 2015*.The planned northward expansion of Highway 427
through the Vaughan enterprise zone to Major Mackenzie Drive will likely spur
industrial development in the municipality. The 3,800 acre Vaughan Enterprise
Zone is one of the largest employment areas in the GTA and is centered around
the Canadian Pacific intermodal rail yard with direct access to Highway 407 and
427 and Highway 7, 27, and 50.
Metrus Properties
Crombie REIT
94,949,425
Total vacancy (%)
7.9%
There were five user sales with an average price/sf of $124, all of which were for
warehouse and distribution space with the exception of one self-storage facility.
There were five investment sales with an average price/sf of $148, although this
average was inflated by the $197 and $169 sales of 21 Alex Ave and 491 Bowes
Rd. respectively, both of which were smaller than 20,000 square feet. The
$100M sale-leaseback of the Sears Canada distribution centre to Metrus
Properties and the $56M sale-leaseback of Sobeys’ distribution centre to
Crombie REIT were by far the largest sales in the GTA this quarter, and may
represent a growing trend of owners capitalizing on high market values. There is
355,047 square feet of warehousing and distribution space under construction
which will deliver by the end of 2016 and is 35.6 percent preleased.
Buyer
Seller
Average rental rate
$6.50
$6.08
$6.00
$5.50
$5.00
$4.50
2,257
Q1
Q2 Q3
Q4
Q1 Q2
Q3
Q4
Q1
Q2
2014 2014 2014 2014 2015 2015 2015 2015 2016 2016
Location
9501 Highway No. 50
9501 Highway No. 50
8265 Huntington Road
Intersection
Rutherford/Hwy 50
Hwy 7/Hwy 50
994,942
794,000
04/01/2016
06/29/2016
$101
$142
106 Aviva Park Drive
Hwy 407/Weston
111,350
06/30/2016
$108
Location
625 Zenway Boulevard II
1380 Credistrone Road
360 Spinnaker Way
* Vaughan Building Standards Department – Summary of Construction Activity to March 31, 2016
Size (sf)
Date
Intersection
Hwy 50/Zenway Boulevard
Locke/Creditstone
Langstaff/Spinnaker
Price / sf
Size (sf)
67,500
58,927
41,905
SUBMARKET
CHARACTERISTICS
Higher ratio of Flex,
R&D, and
Manufacturing
industrial product
when compared to
other GTA industrial
submarkets
Currently most
industrial product is
clustered around the
CN rail yard east of
Highway 400
1
Vaughan retains a
large number of
available development
lands
Vaughan’s industrial
development charges
are among the highest
in the GTA at $25.70per-square-foot
3
4
2
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total net
absorption
(sf)
Average net
rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Warehouse /
Distribution
60,895,022
3.1%
5.0%
764,549
884,424
$6.17
642,099
578,033
839,946
Manufacturing
22,789,677
1.4%
3.1%
103,473
240,022
$5.90
-
-
-
Total Industrial
94,949,425
2.6%
4.3%
913,353
1,423,371
$6.08
642,099
578,033
839,946
Property type
Greater Toronto Area Industrial Statistics
Total
inventory
(sf)
Total
vacancy
(%)
Total
availability
(%)
Q2 total net
absorption
(sf)
YTD total
net
absorption
(sf)
Average
direct
asking rent
($ psf)
Under
construction
(sf)
Q2
completions
(sf)
YTD
completions
(sf)
Brampton
Warehouse / Distribution
Manufacturing
Total Industrial
68,766,940
19,509,386
92,652,965
3.5%
1.6%
3.1%
5.4%
1.6%
4.5%
810,908
115,561
926,469
1,692,488
226,958
1,919,446
$6.04
$5.89
$6.02
1,013,858
1,013,858
454,040
454,040
613,840
613,840
Burlington
Manufacturing
Total Industrial
15,658,068
3,519,910
23,710,352
3.5%
6.3%
4.7%
5.0%
9.3%
6.5%
15,270
(77,948)
(84,368)
75,489
(80,298)
(114,185)
$5.38
$4.89
$5.35
-
67,749
67,749
67,749
67,749
Etobicoke
Manufacturing
Total Industrial
30,415,347
27,585,765
65,283,344
2.2%
1.5%
2.0%
5.2%
4.9%
5.1%
123,531
87,801
278,783
267,650
172,527
549,436
$5.97
$5.31
$5.67
-
-
-
Manufacturing
Total Industrial
19,270,421
3,247,052
23,218,452
9.9%
6.1%
9.4%
22.8%
9.9%
20.5%
81,228
(15,352)
65,876
388,087
(19,652)
370,035
$6.63
$4.57
$6.55
3,285,201
3,285,201
561,607
561,607
920,948
920,948
Mississauga
Manufacturing
Total Industrial
116,122,596
32,589,920
170,096,495
3.4%
3.8%
3.5%
4.3%
4.0%
4.4%
(279,912)
21,266
(318,948)
1,075,585
1,242
959,622
$6.15
$5.31
$6.13
633,258
633,258
70,227
70,227
70,227
70,227
Oakville
Manufacturing
Total Industrial
15,331,451
5,720,752
23,683,500
4.7%
1.0%
3.5%
8.4%
1.5%
7.9%
(39,538)
(46,520)
127,707
184,592
$6.40
$6.20
$6.38
95,666
-
57,760
57,760
Vaughan
Manufacturing
Total Industrial
60,895,022
22,789,677
94,949,425
3.1%
1.4%
2.6%
5.0%
3.1%
4.3%
764,549
103,473
913,353
884,424
240,022
1,423,371
$6.17
$5.90
$6.08
642,099
642,099
578,033
578,033
839,946
839,946
GTA West
Manufacturing
Total Industrial
245,447,458
66,249,893
345,289,221
3.6%
3.5%
3.6%
4.9%
3.7%
4.7%
453,706
129,586
484,616
3,385,766
218,773
3,395,414
$6.16
$5.41
$6.15
4,326,542
100,000
4,960,591
1,077,923
1,153,623
1,597,064
1,672,764
GTA North
Manufacturing
Total Industrial
99,300,882
35,374,373
163,098,527
3.1%
1.2%
2.6%
3.7%
1.4%
3.1%
958,713
32,533
1,136,902
932,536
201,354
1,654,591
$5.62
$5.96
$5.94
868,654
868,654
646,533
646,533
908,446
908,446
GTA Central
Manufacturing
Total Industrial
114,768,227
67,520,512
218,128,118
3.1%
1.7%
2.5%
5.5%
4.2%
4.8%
(203,471)
65,751
4,501
244,312
140,330
773,681
$5.86
$5.78
$5.85
309,091
309,091
20,779
20,779
168,062
GTA East
Manufacturing
Total Industrial
21,909,888
20,129,879
51,563,550
4.9%
0.1%
3.3%
7.4%
1.2%
5.2%
(126,375)
250,000
109,116
450,220
238,720
696,055
$5.45
$4.83
$5.15
23,291
23,291
-
212,486
212,486
Property type
About JLL
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased
value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4
billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients,
the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and
completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management,
has $55.3 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For
further information, visit www.jll.com.
About JLL Research
JLL’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s commercial real
estate dynamics and identify tomorrow’s challenges and opportunities. Our 415 professional researchers track and analyze economic and property
trends and forecast future conditions in over 75 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by
real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and
optimal real estate decisions. For further information, visit www.jll.ca/research.
Office locations:
TORONTO
199 Bay Street, Suite 4610
Toronto, ON M5L 1G3
Tel: +1 416 304 6000
Fax: +1 416 304 6001
TORONTO NORTH
251 Consumers Road, Suite 900
Toronto, ON M2J 4R3
Tel: +1 674 728 0457
Fax: +1 674 642 0195
MISSISSAUGA
110 Matheson Blvd W, Suite 107
Mississauga, ON L5R 4G7
Tel +1 905 502 6116
Fax +1 905 502 5466
MONTRÉAL
1, Place Ville Marie, Suite 3838
Montréal, QC H3B 4M6
Tel +1 514 849 8849
Fax +1 514 849 6919
OTTAWA
275 Slater Street, Suite 1004
Ottawa, ON K1P 5H9
Tel +1 613 656 0145
Fax +1 613 288 0109
EDMONTON
10235 - 101 Street NW, Suite 502
Edmonton, AB T5J 3G1
Tel +1 780 328 2550
Fax +1 780 328 5486
CALGARY
301-8th Avenue SW, Suite 500
Calgary, AB T2P 1C5
Tel +1 403 456 2104
Fax +1 587 880 9966
VANCOUVER
355 Burrard Street, 14th Floor
Vancouver, BC V6C 2G6
Tel +1 604 998 6001
Fax +1 604 998 6018
For more information, please contact:
Thomas Forr
Eric Sweeney
Research Manager
Associate
+1 416 304 6047
+1 647 987 0396
thomas.forr@am.jll.com
eric.sweeney@am.jll.com
Ben Wedge
Industrial Research Coordinator
+1 604 998 6032
ben.wedge@am.jll.com
www.jll.ca/research
©2016 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without
limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this
document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained
herein and no reliance should be placed on the information contained in this document. *Sales Representative

Toronto Industrial Insight

Transcription

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