Toronto’s commercial investment will be shaped by logistics

The logistics sector’s specific needs will considerably impact the valuation of commercial and industrial land in Toronto, according to Bill Argeropoulos of Avison Young.

“In the past, industrial space was predominantly used for manufacturing activities, and many buildings were serviced by direct rail-spur connections,” Argeropoulos noted. “Today, logistics, distribution and warehousing are the main industrial-space uses; as a result, many of these rail spurs have been removed, giving way to greater use of container shipments via intermodal facilities.”

Data released by Morguard Corporation in late October indicated that this versatility, along with strong leasing volume and economic stability, has granted the Canadian industrial real estate segment a “very positive near-term outlook.”

Industrial investment across the country reached a record-high $6.1 billion as of Q2 2018, Morguard reported.

“With quality space at a premium across much of the country and a solid fundamental outlook for the sector, we expect to continue seeing strong activity to finish the year,” Morguard’s Keith Reading said.

Read more: This industry hungers for Toronto’s commercial spaces

Proximity to transport nodes will have an especially notable impact on the investment potential of a property, Argeropoulos explained.

“As a result of the need for increased last-mile efficiencies, demand for industrial real estate more connected to the masses is outpacing supply, reducing vacancy and raising rental rates for buildings within last-mile zones.”

“Increasingly, industrial real estate close to intermodal facilities is in great demand as organizations with logistics and distribution needs have the potential to increase efficiencies dramatically and reduce costs by locating their premises close to these terminals,” Avison Young added in its latest analysis.

 


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