TORONTO, July 5, 2012 -- Toronto Real Estate Board (TREB) Commercial Division Members reported almost 3.5 million square feet of total leased space in the second quarter of 2012. This figure represented a decline of 22 per cent compared to 4.4 million leased square feet in Q2 2011. While the amount of space leased was down year-over-year, average lease rates were up for industrial, commercial/retail and office properties.
Industrial properties accounted for close to 80 per cent of total leased space through the TorontoMLS system in the second quarter, with deals completed for over 2.7 million square feet of industrial space – down by seven per cent compared to Q2 2011. The average lease rate for industrial properties transacted on a per square foot net basis and for which pricing was disclosed was $4.92, representing a 13 per cent increase year-over-year.
“Given the degree of economic uncertainty that has characterized the Canadian economy this year, it is not surprising that the amount of space leased was down in the second quarter compared to the same period in 2011. With this said, while some firms may have temporarily taken a step back from further real estate investment, we continued to see enough demand for average lease rates to remain buoyant over the past year,” commented TREB Commercial Division Chair Cynthia Lai.
Sales of industrial and commercial properties, with 98 and 95 transactions respectively, were down in comparison to the second quarter of 2011. There were also 50 office transactions representing a slight increase over Q2 2011. Changes in average selling prices compared to last year were mixed. The average price per square foot for sold industrial properties was up substantially on a year-over-year basis, whereas the average selling prices for commercial/retail and office properties were down.
“Price change can often be driven by a change in the composition of sales from one year to the next. This was certainly the case for industrial transactions in the second quarter. Last year, larger industrial properties, which generally sell for less on a per square foot basis, accounted for a much greater share of transactions compared to 2012. This compositional shift was the main driver of the jump in the average industrial selling price,” continued Lai.
Second Quarter 2012: All Commercial Lease Transactions
Total Leased Space for All Lease Transaction Types on TorontoMLS®
Total Leased Square Feet
Second Quarter 2012: Per Square Foot Net Commercial Leasing Summary
Lease Transactions Completed on a Per Square Foot Net Basis with Pricing Disclosed on TorontoMLS®
Leased Sq. Ft. (Price Disclosed, Per Sq.Ft. Net)
Avg. Lease Rate (Price Disclosed, Per Sq.Ft. Net)
Second Quarter 2012: All Commercial Sale Transactions
Total Number of Sales on TorontoMLS®
Second Quarter 2012: Commercial Sales Completed with Pricing Disclosed on TorontoMLS®
Sales (Price Disclosed)
Avg. Sale Price Per Sq. Ft. (Pricing Disclosed)