Toronto Real Estate Board (TREB) Commercial Division Members leased over 3.6 million square feet of commercial space through the TorontoMLS system in the fourth quarter of 2011, representing a small 3.5 per cent decline compared to the fourth quarter of 2010.
However, the amount of industrial space leased was up by eight per cent compared to 2010. Industrial transactions accounted for 79 per cent of total leased space in the fourth quarter. The average lease rate for industrial transactions completed on a per square foot net basis and for which pricing was disclosed was $4.92, down 3.4 per cent compared to the fourth quarter of 2010.
“After a dip in economic output in the second quarter of 2011, the Canadian economy rebounded in the third quarter. This rebound was in line with the consensus outlook for steady economic growth through 2012. In keeping with this outlook, it would seem that a number of industrial firms made the decision to take on additional space in the fourth quarter,” said TREB Commercial Division Chair Larry Purchase.
In the fourth quarter, 209 commercial properties were sold through the TorontoMLS system. This result was 13.6 per cent lower compared to the same period in 2010. Industrial property types accounted for 47 per cent of total sales. The average selling price for industrial transactions completed on a per square foot net basis and for which pricing was disclosed was $70.25 – almost a five per cent increase compared to fourth quarter of 2010. Other commercial property types sold for an average $149.68 – up 50 per cent in comparison to the last three months of 2010. It is important to note that the nature of commercial property transactions can vary substantially from year to year. This means that while market forces play a role in the rate of price growth, large swings in the average selling price are often indicative of changes in the types of properties sold in a given reporting period.
“The economic outlook for Canada remains positive, but it is important to note that the risks to this outlook are substantial. How the story will unfold in Europe and south of the border is far from certain. As a result, business confidence arguably remains fragile. This suggests that while we could be headed for a strong year in the commercial market, we should also be prepared for some volatility in the number of transactions and prices along the way,” Purchase added.