Commercial Real Estate Market Watch for Toronto: September 2012
For All Media/Public Inquiries: For All TREB Member Inquiries:(416) 443-8158 (416) 443-8152 Third Quarter 2012Economic Indicators Almost 3.5 Million Square Feet Leased in Q3 2012 TorontoMLSReal GDP Growth 1 TORONTO, October 3, 2012 — Toronto Real Estate Board (TREB) All Leasing Activity* Q2 2012 t 1.8% Commercial Division Members reported lease transactions accounting for (Sq. Ft.) almost 3.5 million square feet of industrial, commercial/retail and officeToronto Employment Growth2 space during the Third Quarter of 2012. This result was down from slightly August 2012 t 1.6% more than 3.7 million square feet leased in the Third Quarter of 2011. 3,728,892Toronto Unemployment Rate The year-over-year change in average lease rates was mixed. Based on 3,481,452 August 2012 u 8.5% transactions for which pricing was disclosed, the average industrial lease rate was up compared to last year whereas average commercial/retail andInflation (Yr./Yr. CPI Growth)2 office lease rates were down. August 2012 u 1.2% “The industrial market segment accounted for almost three-quarters of totalBank of Canada Overnight Rate 3 leased space in the Third Quarter. Average lease rates were up for all industrial size categories reported by TREB. If growth in average industrialSeptember 2012 q 1.0% Third Quarter 2012 Third Quarter 2011 lease rates continues in the Fourth Quarter and into 2013, it would suggest * NOTE: This chart summarizes total industrial,Prime Rate 4 that market conditions are tightening with industrial firms in southern commercial/retail and office square feet leased through TorontoMLS regardless of pricing terms. Ontario more confident about future growth,” said TREB CommercialSeptember 2012 q 3.0% Division Chair Cynthia Lai.GoC Yield Curve (Sept. 2012)4 Commercial Division Members reported 214 combined commercial sales in 3 Month T-Bill t 0.99% the Third Quarter – down 18 per cent from 262 sales during the same period Total TorontoMLS 6 Month T-Bill u 1.02% in 2011. The average selling price was down for all three categories, but a comparison of transactions suggests that the decline was more the result of All Sales Activity* 1 Year u 1.09% a different mix of property types sold this year compared to last, especially 2 Year u 1.09% in relation to commercial/retail and office space. 3 Year u 1.16% 5 Year u 1.31% “The mix of sold office space shifted towards larger properties in the Third 7 Year u 1.47% Quarter of this year. Generally speaking, larger office properties are 10 Year u 1.75% associated with a lower price per square foot. As a result, when larger properties account for a greater proportion of total transactions the overall 262Sources and Notes:1 average lease rate tends to dip, all else being equal,” said Lai. 214 Statistics Canada, Quarter-over-quartergrowth, annualized. “The dip in the in the average commercial/retail sale price was also driven2 Statistics Canada, Year-over-year growth by sales of larger properties. Last year the mix and use of largerfor the most recently reported month commercial/retail properties sold dictated a higher price compared to this3 Bank of Canada, Rate from most recent year. For transactions in smaller size categories, average selling prices were Third Quarter 2012 Third Quarter 2011Bank of Canada announcement4 more comparable between 2012 and 2011,” continued Lai. * NOTE: This chart summarizes total industrial and Bank of Canada, Rates for most recently commercial/retail sales through TorontoMLS regardless ofcompleted month pricing terms.
TREB Commercial DivisionTotal TorontoMLS Leasing Activity* TorontoMLS Average Lease Rates ($/Sq.Ft. Net)*(Millions of Square Feet Leased) Third Quarter 2012 Third Quarter 2011 $25.00 4.0 3.73 $20.37 3.48 $20.00Millions of Square Feet 3.0 2.76 2.56 Third Quarter 2012 $14.36 $15.00 Third Quarter 2011 $10.79 $10.95 2.0 $10.00 $5.05 $4.74 1.0 0.45 0.49 0.47 0.48 $5.00 0.0 $0.00 Total Industrial Commercial/Retail Office Industrial Commercial/Retail Office * NOTE: This chart summarizes total industrial, commercial/retail and office square * NOTE: Average lease rates are reported only for those properties sold on a per feet leased through TorontoMLS regardless of pricing terms. square foot net basis and for which the selling price was disclosed. Source: TREB, Commercial Division Source: TREB, Commercial DivisionTotal TorontoMLS Sales Activity* TorontoMLS Average Sale Price ($/Sq. Ft.)*(Number of Sales) $250.00 $229.64300 262 Third Quarter 2012 Third Quarter 2012 $189.70 $200.00250 214 Third Quarter 2011 Third Quarter 2011 $146.05200 $150.00 $116.11150 124 101 94 $100.00 $70.18 $78.29100 74 39 44 $50.00 50 0 $0.00 Total Industrial Commercial/Retail Office Industrial Commercial/Retail Office * NOTE: This chart summarizes total industrial and commercial/retail sales through * NOTE: Average sale prices are reported only for those properties for which the TorontoMLS regardless of pricing terms. selling price was disclosed. Source: TREB, Commercial Division Source: TREB, Commercial Division Commercial Realty Watch, Third Quarter 2012 2