Toronto’s commercial real estate has magnetized large firms and start-ups alike across all industries, but this has become especially apparent among players in the logistics segment, according to real estate investment services company Marcus & Millichap.
In its Industrial Research Market Report (Second Half 2018) released last week, Marcus & Millichap stated that logistics companies are continuing their expansion in Toronto at an accelerated pace.
This is predicted to push commercial vacancy down to the historically low level of 2.2% by the end of 2018, following a rate of 2.4% in Q2 (already the lowest observed rate in more than 5 years).
“Industrial users remain in search of functional space. Amazon, Wayfair and other logistics companies are highly active in their efforts to enhance local supply chains as online shopping becomes more widely adopted, contributing to strong rent gains in one of North America’s tightest markets,” Marcus & Millichap explained in its analysis.
As of the second quarter, average rent in the city’s commercial real estate increased by 10.3% to reach $6.94 per square foot.
“Robust demand has lifted pricing expectations and widened the buyer/seller gap, leading some private investors to wait on the sidelines in hopes of finding discounted pricing.”
Marcus & Millichap said that logistics firms will ultimately boost the city’s net commercial absorption of as much as 10 million square feet until December 2018.
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