“[The commercial market] was kind of stagnant but I wouldn’t say worse,” Carson Lambert, an associate with Avison Young, tells REP. “But because commercial lease cycles are so long, you can’t really draw a trend off that.”
According to figures released by the Toronto Real Estate Board, 5.12 million square feet of commercial space was leased during the fourth quarter of 2014. While that’s five per cent lower than the same period a year ago, prices for commercial rentals rose 10.6 per cent to $21.03 per square foot.
And Lambert says that might be a smarter figure to pay attention to, since prices are often “synonymous” with a healthy market.
Still, leased industrial space fell 10.2 per cent to 3.7 million square feet, with average lease prices falling two per cent to $5.22 per square foot. Space reserved for office use, however, realized a 22.4 per cent increase in leased space, to 850,986 square feet. The cost of office space rentals rose 0.8 per cent to $13.45 per square foot.
Similarly, average sale prices were mainly up, with the cost of office space rising a whopping 28.8 per cent in the October-to-December period, to $289.62 per square foot. Prices for industrial space also increased year-over-year, up 5.5 per cent to $102.87 per square foot, though commercial space prices fell 1.2 per cent to $250.80 per square foot.
Total sales, however, dropped 27.7 per cent to 243 transactions during the fourth quarter. That decline was mainly on a 32.1 per cent drop in sales of industrial spaces, down to 93 transactions in the fourth quarter of last year, and a 35 per cent drop in commercial sales, to 91 transactions in the last three months of 2014.
“Looking forward through 2015, the Greater Toronto Area continues to be a global region with a diversified economy and a high quality of life,” Etherington said. “These attributes will continue to put the Toronto area in good stead, as it relates to attracting businesses and new comers from around the world.”
The latest figures for Toronto’s commercial real estate industry show a weaker fourth quarter, but agents on the ground say three months are hardly indicative of the market as a whole.