ITRA Global Reports Canada’s Industrial Real Estate Market Making Strong Gains

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Despite conflicting news stories over the past few years on the state of the international economy, Canada’s industrial sector seems to be much stronger than most Canadians think. The industrial space vacancy rate is a strong barometer for the health of the Canadian economy – and it is going down.

Jeff Howell

When we see the landlords who control the big box product and the landlords who control the small unit sector both show strong performance, we know we are on to something.

Despite conflicting news stories over the past few years on the state of the international economy, Canada’s industrial sector seems to be much stronger than most Canadians think. The industrial space vacancy rate is a strong barometer for the health of the Canadian economy – and it is going down.

“Not only do we track the entire industrial market, but we also monitor portfolios of individual landlords. When we see the landlords who control the big box product and the landlords who control the small unit sector both show strong performance, we know we are on to something.” says Jeff Howell, partner at Nidea Corporate Real Estate, the Toronto affiliate of ITRA Global. “The largest industrial landlord had over two million square feet of available space for lease at the beginning of the year. That number is now down to just over 1.4 million square feet. Taking into account the fact that they also built almost one million square feet of new buildings during that time, this is a massive change, especially given that this landlord had over 700,000 square feet come back to the market in 2012. We are seeing an unprecedented rebound.”

Climbing gas prices, geopolitical uncertainty, and the rising middle class in the third world are all forces supporting an industrial rebound. “Markets are markets – they ebb and flow.” says Mr. Howell. “Take the 3rd world countries – expansion creates higher income for the middle class. Not only does this make offshoring less attractive, but the purchasing power rises and buying goods made in countries like Canada, Germany and the United States have tremendous snob appeal. What we view as everyday products carry much more prestige depending on the country in which they were made. This drives manufacturing demand in first world countries, while at the same time rental rates here have become more attractive due to offshoring in the first place.”

While these are just a few factors that contribute to the overall industrial leasing picture, their relevance seems to be growing stronger. Although they did not play a significant role over the past decade, they certainly will in the future.

As a co-founder of Nidea Corporate Real Estate, Jeff is an owner in one of the fastest growing tenant representation firms in Toronto and is a leader in his field. ITRA Global is the largest commercial real estate organization devoted to representing corporate tenants and buyers. With coverage in major markets around the world, ITRA Global consists of seasoned professionals with an average of twenty years experience and is differentiated by its focus on advocacy for the corporate tenant and buyer. Clients benefit by having an experienced professional as their trusted advisor -- conflict-free representation with total objectivity.

For more information about the corporate real estate market in the Toronto area, contact Jeff Howell at 1.416.941.9900 or jhowell(at)nideacorp(dot)com.

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Beth Wade
ITRA Global
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