A report by JLL revealed that the Greater Toronto Area (GTA) industrial market witnessed continued cooling in the second quarter as average net asking rents slipped below the $18.00-mark for the first time since 2022. Vacancy saw a sizeable 50 basis point increase to 3.6 per cent quarter-over-quarter, the highest rate seen since the second quarter of 2016. In terms of quarterly net absorption, but reached -2.2M s.f., which was mainly due to demolitions for upcoming infill developments and tenant exits for new direct availabilities.
The total under construction square footage increased from 16.7 million s.f. to 17.4 million s.f. quarter-over-quarter. Average net asking rents dropped 3.3 per cent year-over-year to $17.92, the first yearly decline noted in over a decade.
Despite all odds, the construction pipeline grew to 17.4 million s.f., with the largest groundbreakings being two buildings at Orlando’s Coleraine Business Park in Brampton.
The largest quarterly delivery was seen at BGO’s Fifth Line Business Park in Milton for a total of 963,507 s.f.
In terms of major leasing activity, the report said it totaled 3.8 million s.f. during the quarter, an increase over the 2.5 million s.f. seen in the first quarter of 2024 and the first quarter-over-quarter increase after a year of consecutive decreases.
The largest quarterly lease was Trillium Logistics obtaining 439,899 s.f. at 100 Ironside Drive in Brampton as part of a logistics contract with the LCBO.
The report noted that quarterly net absorption remained negative for a second consecutive quarter at -2.2 million s.f., with the largest contributor being Panattoni demolishing Ford’s former 930,368 s.f. plant in Brampton to make way for a 1.3 million s.f. 4-building redevelopment.
According to the report, trends towards right-sizing suggest that subleases and direct availabilities will continue to hit the market at a high rate through to at least fall, despite moving at a slower pace in comparison to early 2024 as economic optimism grows.
Tenants can expect to enjoy a greater availability of industrial product at all sizes, as a result.