Trends in industrial real estate

Trends in industrial real estate

Talk of Canadian real estate tends to focus on family homes, high-rises, and retail destinations. Nevertheless, the country’s industrial real estate sector is undergoing changes that deserve their own spotlight. Ahead are key industrial real estate trends to watch out for as a new decade takes shape:

E-commerce demand

The steady rise of e-commerce activity is driving intense demand for facilities that can store and manage inventory. This is just one of the reasons the Globe and Mail’s Commercial Real Estate Outlook for 2020 claimed the industrial category was the “darling” of 2019’s real estate community and poised for growth in the year ahead. Per the report,

“It’s all about beds and sheds,” said Frank Magliocco, a partner, real estate and assurance for PricewaterhouseCoopers Canada, adding, “Beds being multifamily and sheds being industrial. That’s where they put their money.”

Short supply

E-commerce may be conducted in the virtual environment, but fulfilling orders requires an abundance of physical infrastructure. As more and more organizations take their offerings online, the space to store, manage, and facilitate orders in Canada is shrinking. According to Cushman & Wakefield’s 2019 Canadian Industrial Real Estate report, the national availability rate for industrial space dipped to 3.1% (the lowest on record) as of this time last year, while availability rates in Toronto, Vancouver, and Montreal – the top three most active industrial markets – fell to equally historic lows.

“Companies are reinventing themselves to serve growing online demand, and there’s huge pressure for fast last-mile delivery. This has detonated record demand for well-located warehouse and logistics space – and supply can’t keep up,” reports, Stuart Barron, National Director of Research with Cushman & Wakefield, adding, “The bottom line is whether you’re leasing or buying, you’re going to find an extreme scarcity of product and face sticker shock.”

Rising rents

Heated demand for industrial space is having a predictable impact on rental rates. According to Scott Addison, President of Brokerage Services for Colliers Canada and a contributor to the Globe and Mail’s 2020 CRE outlook: “The average rental rate is $9 a square foot [in Toronto] … For years, people didn’t think Toronto would break out of the $5 a square-foot range.”

Bigger accommodations

When it comes to fulfilling e-commerce appetites, size matters. As such, warehouses are expanding in square footage, as demonstrated by the construction of Oxford Properties’ Riverbend Business Park in Burnaby, BC, the country’s first multi-story industrial building.

Smarter operations

The digital revolution is in full-swing, and with it, the continued adoption of automation, artificially-intelligence, Internet of Things technologies, and cloud-based computing – tools which are being embedded within warehouses and facilities to help keep pace with country-wide demand.

Big things are taking place in the industrial real estate sector. Stay focused on what counts, and trust Fort York Paving to take care of your pavement emergencies, repairs, and maintenance.