Market Report

Q3 2024
Commercial Real Estate for
Peel, Halton & Hamilton Regions

Read Report

Overview

As we enter the fourth quarter of 2024, the Greater Toronto Area (GTA) industrial and office real estate markets remain cautious, with both sectors facing unique challenges. High interest rates and lingering economic uncertainty continue to weigh on sentiment, though recent rate cuts have provided a degree of optimism. Nonetheless, market activity remains measured as investors and tenants proceed with caution.

In the industrial market, Q3 saw stable activity, with Mississauga’s average sale price per square foot holding at $465, a 6% year-over-year increase. Other markets, including Oakville and Hamilton, posted modest gains, while Burlington experienced the strongest growth at 17% year-over-year, with prices reaching $380 per square foot. Net absorption across these markets was positive, with Mississauga leading at 189,672 square feet, though rising availability rates in Burlington (5.3%) and Oakville (4.3%) could signal a softening in demand as supply catches up. Despite these pressures, tenant demand remains steady for well-located industrial properties.

The office market continues to face significant challenges, with high vacancy rates and negative absorption across several key markets. Mississauga’s office market saw a sharp -192,478 square feet in net absorption, with an availability rate of 15.2%. Burlington and Hamilton also struggled, with net absorption of -19,582 and -62,645 square feet, respectively, pushing availability rates to 13.6% and 11.17%. On a positive note, Oakville’s office market showed some resilience, with positive absorption of 55,890 square feet and a lower availability rate of 9.4%. Average sale prices per square foot remained relatively stable, with Mississauga at $430 and Hamilton seeing a substantial year-over-year decrease of 37% to $287 per square foot. The challenges in the office market reflect ongoing adjustments to hybrid work models and tenant preferences for flexible, smaller spaces.

In the land market, although prices per acre have risen across the GTA, the pace of transactions remains slower than in prior years. Caution persists among both developers and investors, with Mississauga’s average price per acre rising 6% to $2.69 million, while Hamilton saw a 23% decrease to $1.52 million per acre. The limited volume of sales indicates that market participants are proceeding with prudence, focusing on select, high-quality opportunities.

Looking ahead, while interest rate cuts may offer some relief, both the industrial and office markets will likely continue to face challenges. Industrial growth is expected to remain steady, albeit at a moderated pace, while the office market may take longer to recover as businesses continue to adapt to evolving workspace needs.