High demand for larger, more modern industrial spaces has prompted construction of about 4 million square feet of industrial space in the Greater Toronto Area (GTA), according to a new study from Newmark Knight Frank Devencore.

Canada’s largest corporate real estate advisor says new developments happening in Mississauga, Brampton, Caledon and Milton are part of an industry evolution.

“The continued changing dynamic of industrial activity, with the shift away from manufacturing to e-commerce, logistics and warehousing enterprises, is having a clear impact on the GTA’s industrial real estate landscape,” says Rob Renaud, managing principal and broker of record at Newmark Knight. “The developments currently underway will certainly help to ease the demand; however, as needs evolve, so too will the specifications that tenants require in their premises.”

Although most tenants are demanding spaces of 400,000 to 1.5 million square feet or more, others are looking in the 20,000 to 100,000-square-foot market. Such spaces are expected to offer more trailer parking, better office layouts, more energy-efficient systems and building designs personalized for the space users.

Clear heights as high as 40 feet are also in demand, although Renaud adds the new 32- to 36-foot clear developments do not address this need.

“Given these issues, space users must weigh all of their options, including build-to-suit premises where they may see leases that extend up to 20 years,” Renaud emphasizes. “Tenants who do not necessarily require the most modern space have a greater range of options. He suggests “blend-and-extends and/or lease restructurings” may also prove advantageous in this case.

Other findings from the market study show vacancy rates throughout the GTA have fallen 4.2 to 3.9 per cent, while asking rental rates have remained relatively stable over the past twelve months, averaging $5.75 in the GTA as a whole.