Demand for industrial property high in London and Windsor areas: CBRE

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The industrial real estate market in southwestern Ontario is nearly full, according to a new report, with some of the country’s hottest spots along Highway 401.

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The Another Year, Another Record report by commercial real estate brokerage firm CBRE outlines the fourth quarter industrial real estate market in and around Windsor. She found that the availability rate in southwestern Ontario — from Waterloo to Windsor — was well below national averages.

Waterloo reported the lowest industrial real estate availability rate in the county at 0.6% – beating major markets like Vancouver and Toronto – while London reported an availability rate of 0.8%. Windsor recorded an availability of 1.4%, after Montreal, Vancouver and Toronto tied at 0.9%. The current national average is 1.8% uptime.

It’s definitely a tough market

“Today’s industrial market has never been stronger,” said Brook Handysides, vice president of CBRE in Windsor.

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CBRE’s report reveals that in Windsor, asking prices for industrial real estate rose 35% year-over-year in 2021 to a record high of $123 per square foot, while rents for industrial spaces increased by about 6%, reaching a new high. $8.22 per square foot.

The low availability rate can be mixed, depending on whether you’re buying or renting rather than selling, said Brad Collins, senior partner at CBRE.

“When we’re talking about 1.4% uptime, that’s an almost fully occupied market,” Collins said. “I don’t know if you can call it good or bad – it depends on which side of the coin you’re on. It’s definitely a tough market.

This means that the Windsor and Essex County region is a desirable – and still relatively affordable – market for businesses to locate compared to other hotspots in the province, reflecting a similar trend in the residential real estate.

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“We work with clients who are looking to expand here because of price,” Collins said. “Markets like Toronto, where they had to compete and were either overtaken or just beaten, and they went to Windsor and saw the value.

“We have unprecedented demand from users looking to come to Windsor and obviously create jobs…unless that demand goes down or we get a substantial influx of new construction buildings there will there really is no end in sight.”

The trend is spurred by high prices in the Greater Toronto Area that spill over elsewhere in the province.

“Even though we’ve had unprecedented growth in Windsor, you look at it in terms of what’s happening on the freeway,” Handysides said. “Relatively speaking, we still have a very good price market, even regardless of whether sales prices and rental rates continue to increase in price. »

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But an availability rate of just 1.4% represents an essentially full market, Collins said, whereas a more balanced market might have an availability rate of 6 to 8%.

The CBRE report also revealed that there are 92,000 square feet of new industrial space under construction, all of which are pre-sold or leased, meaning it offers little relief on the supply side of the economy. equation.

Windsor’s industrial availability has been trending downward since around 2012, according to the report. In the second quarter of 2012, the availability for industrial real estate was 15%, falling to 4% in 2017.

There is no quick fix, Handysides said. It’s all about supply, and building more industrial real estate can be expensive and time-consuming – so the low availability and rising prices of industrial real estate are likely to persist, at least for the foreseeable future. to come up.

“Construction timelines may still not keep pace with business,” he said. “We expect these numbers to continue to tighten and become more aggressive.”

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