Toronto Real Estate Board (TREB) Commercial Division Members reported almost 392,000 square feet of leased industrial, commercial/retail and office space through the TorontoMLS system in January of 2013. This result, for properties sold on a per square foot net basis and for which pricing was disclosed at time of reporting, was down by approximately 15 per cent in comparison to January 2012.

More than 75 per cent of space leased in January involved industrial properties. The amount of leased industrial space was down by close to 25 per cent compared to January 2012. The average lease rate was $5.25 per square foot net. This average rate represented an 11 per cent increase compared to January 2012.

“A slow recovery in the export sector has presented headwinds for the industrial sector. However, the consensus outlook is for continued economic growth in 2013 in Canada. It is felt that improving global economic conditions will bolster exports. With this outlook in mind, it is likely that some industrial firms who put real estate investment on hold will once again become active in the market,” said TREB Commercial Division Chair Cynthia Lai.

There were a combined 40 industrial, commercial/retail and office transactions in January – down from 58 sales in January 2012. The change in the average selling price per square foot was mixed and remained somewhat volatile on a year-over-year basis due to changes in the type, size and location of properties sold in January 2013 versus January 2012.

“The large annual rate of price growth for industrial properties was due to the fact that no property larger than 50,000 square feet sold this past January versus four such transactions in January 2012. Larger properties generally sell at a lower price per square foot,” said Lai.

“In the office market, the overall average selling price for January was up substantially over last year because the geographic breakdown of sales changed. This year there were more office transactions in the City of Toronto. All else being equal, office selling prices in the City of Toronto are higher compared to surrounding regions,” continued Lai.