·The London office market experienced a significant decline in vacancy this quarter, compressing by 120 bps to 16.9%. Both the core and suburban markets exhibited strong market fundamentals in Q4 2019, as their vacancy rates decreased by 80 bps and 210 bps respectively.
·Following a strong end to 2019, London’s downtown market recorded its first positive year-end absorption total since 2015. As a result of this activity, there remains only a few large-blocks of available space in Class A product.
·Attracted by the abundance of free parking and transportation accessibility, the suburban market recorded a year-end market high of 90,908 sq. ft. of positive net absorption in 2019. Fanshawe College drove leasing activity in the suburban market this quarter, fully occupying 37,785 sq. ft. at 1060-1064 Wellington Road.
·Heading into new year, London’s vacancy rate is expected to compress further as previously owner-occupied buildings will join the city’s competitive inventory in 2020. With these spaces focused in the suburban market, we are expecting that there will be net new absorption from companies growing out of these owner-occupied properties into leased premises.
·Strong market fundamentals led London’s industrial market to record 350,575 sq. ft. of positive net absorption this quarter, compressing the availability rate by 50 bps to 3.0%. As a result of continued demand for warehousing space, there is a current shortage of available quality product in the marketplace.
·With a limited number of large-scale industrial buildings currently on the market, the average net rental rate and sale price have increased by 1.5% and 6.4%, respectively, since Q1 2019. Following suit to Canada’s major markets, landlords and property owners in London are expected to drive sale prices and lease rates for the foreseeable future.
·Following the completion of 132,327 sq. ft. this quarter, 878,921 sq. ft. of warehouse space in London remains under construction. Due to a lack of available supply, users are being forced to consider new construction to fulfill their warehouse needs.
·With a lack of existing product in newer buildings currently available, Dancor’s new 23,358 sq. ft. construction project at 2240 Huron Street is a good example of purpose-built industrial developments that will help fulfill tenant needs in the small-bay product category.