- What Year to date, industrial sales in Scarborough have surpassed the 2023 total
- Why The June increase in the federal capital gains tax rate likely drove first-half activity
- What next Deal volume this year could surpass the record level of activity seen in 2021
Industrial sales activity in the GTA remains depressed through the first half of the year, but Scarborough is bucking the trend.
According to data compiled by JLL, the Toronto borough notched $382.5m of industrial property sales worth more than $5m as of early August. That’s well above the $322m logged for the full year 2023 and $365.4m tallied in 2022.
In comparison, the GTA has seen $2.95bn of sales thus far in 2024, a third of 2023’s final tally of $9bn and less than half the totals for the previous two years.
“Generally speaking, the GTA is down in 2024, but Scarborough specifically has had a very strong year so far,” Chad Piche, JLL Canada’s national industrial research manager, told Green Street News.
In fact, sales in Scarborough are on pace to exceed the $487.1m record achieved in 2021. “We’re only halfway through the year, and we’re actually on pace to beat 2021, which in Toronto and Canada as a whole was the strongest year for sales volume,” Piche said.
Scarborough, with 61.7m sq ft of total industrial space comprising 7% of the GTA’s overall inventory, accounts for 13% of sales in the region thus far in 2024. It places third overall for submarkets in the GTA, trailing only much larger Brampton and Mississauga.
Piche said the increase in sales volume for Scarborough could be attributed to the closing of several larger deals ahead of the June 25 increase in the federal capital gains tax rate.
However, he and other market watchers also noted the healthy demand among users for smaller industrial properties, often small-bay facilities with multiple units, which are common in Scarborough. Such versatile buildings can accommodate a variety of light-industrial uses.
“There’s a lot of those existing older industrial buildings with low ceiling heights around Lawrence and Eglinton [Avenues] and northeast Scarborough along Finch [Avenue] and Markham Road,” a veteran GTA broker told Green Street News.
“You can easily convert them at a lower cost to smaller multi-tenant user buildings and drive higher rental rates.”
The vacancy rate for small-bay industrial properties in Scarborough remains low, bolstering rents.
“There’s very little vacancy in that subset of the market,” another broker told Green Street News. “There’s not a lot of supply, and no one’s really focused on building either.”
According to Altus Group, June deals in Scarborough include the $26.3m sale of a 149,000 sq ft warehouse at 440 Comstock Road near the intersection of Warden and Eglinton Avenues. KingSett Capital sold the building to a private investor for $177/sq ft in early June.
Also, EM Dynamics purchased a 51,000 sq ft industrial building at 40 Commander Boulevard from Dream Industrial REIT for $340/sq ft. The $17.2m purchase closed in late June.
Another late-month transaction for $25m was completed between two private parties for an 85,000 sq ft warehouse and distribution facility at 330 Finchdene Square. The property sold for $295/sq ft.
