September 2012 Commercial Real Estate Leasing Down In September: TREB

According to the Toronto Real Estate commercial division, commercial lease transactions dropped slightly from 3.7 million square feet of leased space to 3.5 million in September, year-over-year.

“The industrial market segment accounted for almost three-quarters of total leased space in the Third Quarter,” said the Toronto Real Estate Board commercial division chair, Cynthia Lai. “Average lease rates were up for all industrial size categories reported by TREB.  If growth in average industrial lease rates continues in the Fourth Quarter and into 2013, it would suggest that market conditions are tightening with industrial firms in southern Ontario more confident about future growth.”

The annual lease rate increased for industrial properties, while dropping for commercial and office spaces.

“The mix of sold office space shifted towards larger properties in the Third Quarter of this year.  Generally speaking, larger office properties are associated with a lower price per square foot.  As a result, when larger properties account for a greater proportion of total transactions the overall average lease rate tends to dip, all else being equal,” she continued.

“The dip in the in the average commercial/retail sale price was also driven by sales of larger properties.  Last year the mix and use of larger commercial/retail properties sold dictated a higher price compared to this year.  For transactions in smaller size categories, average selling prices were more comparable between 2012 and 2011,” said Lai.

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