The transportation industry in Canada is massive. Approximately 90% of consumer products and foodstuffs are shipping by carrier throughout the nation, as well as two-thirds of all trade with the United States. While this demand has a notable impact on heavy haul container trucking companies and the country’s commercial logistics, it has also had a powerful secondary effect: a sky-high demand for warehouses.
According to the Spring 2019 Global Industrial Market Report from Avison Young, a Toronto-based commercial real estate services firm, large warehouses near major cities are being sought after in the extreme; e-commerce and last-mile logistics providers want to be close to their customers to ensure efficient deliveries. Because so many of these carrier companies are vying for space, demand is red hot.
“E-commerce logistics, distribution, and warehousing requirements continue to drive the market and are increasing in line with online retail sales,” said Mark E. Rose, chair and CEO of Avison Young. “This strong demand has driven down supply, with developers increasingly becoming more innovative in regard to maximizing value through the repurposing of obsolete assets such as vacant big-box retail stores and aged office buildings, as well as exploring multi-story facilities in a growing trend that caters to a demand for close-in warehousing and distribution.”
The facilities in the highest demand are technologically advanced; these customized design-build locations are fully-automated, a feature that renters desire in order to further optimize the supply chain. Additionally, e-commerce and logistics companies are laying claim to a growing share of U.S. warehouse leases in an attempt to find the most optimal sites.
As a result, investors are eagerly building new properties to meet this demand. The report revealed that the development of both product deliveries and the new space under construction remains robust. These investors are also looking to find additional value in older assets near urban areas to further boost their profits. Currently, they show no signs of stopping — or even slowing down.
“Investor interest in the industrial sector continues to grow unabated and the forecast for the remainder of 2019 is that industry dynamics will continue to be positive, attracting investors and resulting in low yields and rising asset values,” Rose said.
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