Our speaker this week was Jim Kitchen, Industrial Real Estate Broker with Re/Max Realty Specialists Inc. Jim gave us a fascinating overview of what is going on the in the Markets.

The GTA is the 3rd largest megopolis in North America and the 3rd largest Industrial Node in North America.

 

For small Industrial Sales (10-20,000 sq. ft.)- buildings are now down to about $98 per square foot.

20,000-50,000 square foot buildings are now down to $80 per square foot. The days on market were down to 50 in 2008, but are now up to 113 and this will probably increase over thge next couple of years.

Other issues:

Development costs; City Infastructure costs;  Industrial land is now $1 million per acre;

Mississauga is out of land.

Implications:

Vendors are chasing the market; there is huge money on the sidelines; troubles aren't over yet; Investment #s do not work; Residential is the "shining star"

Effective strategies:

Periodic lease audits; Look at cube spread; Lease to save/buy annuity;Survey clients, suppliers, employees re location; Unique is bad; Dissect proposals; Advanced Planning.

RESIDENTIAL SIDE: 

Jim looked at W20 ( the northwest corner of Mississauga). The time on market is now 7 days and the % of listing price is now 102%. The residential market did not fall flat as many predicted. Low-ball listing is now happening to start bidding wars, and the residential market is very hot.

Residential outlook:  Low supply; high demand; cheap money; cavalier lenders; ongoing immigration; aging demographic.

PREDICTIONS:

1.Average industrial lease rates will drop below $5 net.

2. Vacancy rates for industrial property will rise to 9% byt the end of 2010.

3. Sale prices will core down further.

4. Some land will be re-zoned residential.

5. Residential blom will cool mid 2010 but will stay strong.

6. Move to Green will accelerate. 

On a personal note, Jim and his wife Catherine live in Mississauga, have 4 children and an new grandson, Benjamin.

Jim has spent the last 24 years as an Industrial Real Estate broker. He has been a Rotarian since 2990.