Even though a record-breaking 16.3 million square feet of new industrial space was added to the Canadian market in the final quarter of 2023, demand continues to outpace supply, according to a new report.
The national availability rate rose to 4.3 per cent, up 0.7 percentage points, with gains across all major markets, according to a new report by Altus Group Ltd. The record-breaking increase in new industrial space, 62 per cent of which is available, surpassed the average fourth-quarter completions of less than 10 million square feet, yet supply isn’t catching up with demand, the company said.
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“Furthermore, tenants continued to be proactive in securing suitable spaces ahead of their lease expiration, and in response, landlords are pre-emptively listing their spaces ahead of their vacancy,” it said in its report.
Ray Wong, a vice-president at Altus, said the increase in project completions represents only a minor fraction of what is needed in the industry.
“Even though the overall availability rates have increased from the third quarter to the fourth quarter, from 3.6 to 4.3 per cent on a national basis, we have a very tight availability rate for industrial,” Wong said. “The challenge for tenants is when their needs change and they’re looking at a renewal, they have limited availability and choice in the marketplace.”
He added that landlords immediately start to market the space when some of those tenants indicate they have secured other locations.
“They definitely want to make sure that there’s no gap in the rent payments that they want,” Wong said.
Despite a slight increase in availability rates, lease rates continued to rise compared to the fourth quarter of 2022. Montreal had the largest average year-over-year increase at 16 per cent, followed by Toronto at 4.8 per cent, and Calgary and southwest Ontario tied at 3.7 per cent. Halifax was the sole region to decline, falling by 5.6 per cent. On a national basis, the average rental rate increased by 7.7 per cent.
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Of the 79 buildings completed, totalling 16.3 million square feet, Altus said 38.3 per cent were pre-leased. The bulk of this new supply was in Toronto (8.7 million square feet), Calgary (2.9 million) and southwestern Ontario (2.5 million).
E-commerce needs account for most of the warehouse demand in the market, Wong said.
“The Amazons of the world, the Walmarts, need very large distribution warehouses, from half a million to close to a million square feet of space,” he said. “Warehouse distribution sites have been the most in demand.”
Wong added that despite the challenges of higher interest rates and inflation, demand in Canada’s industrial sector remains strong.
“Your rental rates are increasing as well as your sale prices,” he said. “And again, even though the availability rate has moved up a little bit, there’s still a lot of demand, by both investors and as well as users to purchase and lease.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
