The Greater Toronto Area (GTA) industrial market has recorded a region-wide drop in availability rates, reports Avison Young.

According to the Third Quarter 2013 Greater Toronto Area Industrial Market Report, vacancy has dropped from the 2010 recession high of 7.1 per cent to a recently recorded 4.8 per cent. This results from  a decline in new development paired with a rise in demand. The GTA’s average net asking rent is up to $5.59 per square foot (psf) in the third quarter of 2013.

“Traditionally, the GTA averages approximately 10 million square feet (msf) of new construction per year,” says Sally Fitzpatrick, an Avison Young principal who specializes in industrial property transactions. “In the downturn, that number fell between two to three msf annually. We are now seeing an increase in new construction in 2013 for both speculative and design-build product.”

Challenges facing the market includes the lack of modern warehouse property in excess of 100,000 square feet. Demand has been particularly strong in the GTA North market; its four per cent availability rate is the lowest in the region.

The changes are also a result of more distribution centres for large domestic and multinational retailers moving into the GTA over the last three years.

“The influx of U.S. retailers, online shopping and same-day delivery are all having a positive impact on the GTA industrial market,” says Martin Dockrill, principal and managing director at Avison Young’s Mississauga office. “E-commerce is changing the way we look at retail and distribution, and is one of the factors initiating the development of new DCs across the GTA.”