“While the past year has been marked by economic uncertainty, we continued to see growth in the Canadian economy. Over the past few months, we have also heard more good economic news than bad, both in the Canadian context and in relation to major trading partners like the United States. The result has been a respectable level of leasing activity and a moderate gain in the average lease rate on a per square foot net basis,” said Commercial Division Chair Larry Purchase.

There were 233 total commercial sales in the first quarter of this year – down by almost seven per cent compared to the first three months of 2011. Broken out by type, sales of industrial and other commercial types were down by 4.5 and 9.5 per cent respectively compared to 2011. Average sale prices per square foot for transactions with pricing disclosed were down for both the industrial and other commercial categories.

“The dip in average sale prices was due to a change in the composition of sales in both the industrial and other commercial categories this year compared to last. In both cases, a much higher share of first quarter 2012 deals were for larger sized properties, which generally sell for a lower price per square foot,” added Purchase.

The average lease rate for industrial properties was $4.81 per square foot net (calculated for transactions where pricing was disclosed) – down by 12 per cent in comparison to the average of $5.47 reported for February 2011.

“Uncertainty surrounding the global economic outlook continued to weigh on many firms’ real estate investment decisions in February. With this said, the recent GDP release for the fourth quarter of 2011 pointed to continued economic growth in Canada. This positive news coupled with the consensus expectation for sustained growth through 2012 may prompt an uptick in commercial real estate investment as we move through the year,” said Commercial Division Chair Larry Purchase.

Commercial Division Members also reported 56 sale transactions in February, representing an eight per cent increase compared to February 2011. A 17 per cent dip in industrial sales was more than offset by a 39 per cent increase in sales of other commercial property types. Average per square foot selling prices were down for both categories.

“The dip in average selling prices for industrial and other commercial properties was due in large part to a greater number of large property sales this year versus last. Generally speaking larger properties sell for less on a per square foot basis,” said Purchase.

Despite the decline in the amount of space leased, average industrial lease rates held up well. The average lease rate for industrial properties was $4.73 per square foot net (calculated for transactions where pricing was disclosed). This figure was up by more than 12 per cent in comparison to the average of $4.21 cents reported for January 2011.

“Firms in the GTA industrial sector have a very cautious outlook right now. While the prospects for the United States economy are looking more positive, there continues to be substantial concern surrounding economic recession in Europe and what the implications could be for the global economy. In the short term, this means that unless it is absolutely necessary for a firm to move or take on more space, real estate decisions will likely be on hold,” said Commercial Division Chair Larry Purchase.

Commercial real estate sales were up year-over-year in January, both for the industrial segment (+13 per cent) and other commercial property types (+10.5 per cent). Average selling prices per square foot (for transactions with pricing disclosed) were down for both property categories in January compared to a year earlier.

“While the number of industrial and other commercial property sales was up over last year, the exact nature of these deals likely varied in terms of location, size and exact property use between January 2012 and January 2011. The changing composition of deals from one year to the next often has a substantial impact on overall average selling prices,” added Purchase.

June 3, 2011 — Toronto Real Estate Board (TREB) Commercial Members reported 936,769 square
feet of leased space in May 2011, up 98 per cent from the 472,278 leased square feet reported in
May 2010.