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Why is Demand for Industrial Real Estate Rising in Toronto?


Investors are taking a second look at a whole other segment of investment property and shifting away from residential and commercial real estate. Thus, their demand has increased for industrial real estate in Toronto significantly over the last 2-3 years. While the supply-and-demand issue has affected this part of the market, new construction is in the pipeline. So, there will still be opportunities to invest in industrial real estate. Let’s look at other factors that are driving the buyers’ interest.


What is Industrial Real Estate?

This term basically refers to any building that houses facilities for manufacturing, research and development, production, distribution, and storage. Because of these purposes, industrial real estate proves to be a vital part of the global economy, therefore presenting value for any real estate investor who is looking to branch out beyond residential or commercial real estate.


Reasons Why Demand for Industrial Real Estate is on the Rise

Giving close attention to the advantages of owning industrial real estate might help sway your decision if you’re worried about supply chain issues or whether the property would sit on the rental market for a long time. Here are some aspects to think about.


Low Maintenance Costs



With increased fuel prices and growing inflation, it makes sense to save money wherever possible. Such is the case with industrial real estate. The upkeep doesn’t cost nearly as much as other forms of real estate because there are fewer improvements or repairs needed. Furthermore, all responsibilities regarding maintenance fall on the tenant (as opposed to residential properties and some other forms of commercial properties). Consequently, this frees up both time and money for the property owner.


Hassle-Free Passive Income



Another attraction to investing in industrial real estate involves the situation of earning passive income with less worry and work compared to residential and other forms of commercial. Furthermore, you’re looking at less tenant turnover because of the longer lease terms that are involved with renting a space to a business that will utilize it for the long term. This situation translates into a more stable income stream.


High Rental Yield



Another reason for the rising demand for industrial real estate involves the possibility of a high rental yield. The landlord only bears the responsibility for the mortgage and any capital improvements, which results in higher returns since fewer expenses are incurred. With the tenant being responsible for all operating costs, you will pocket more profit.


New uses for vacant properties



Likewise, industrial real estate provides some flexibility with usage and setup compared to its other commercial counterparts. A non-industrial commercial building, in this instance, is usually designed with just one purpose in mind—such as retail space or a restaurant. On the other hand, industrial property, with its open space, can be repurposed with minimal expense depending on what your immediate needs are.


Landlord-Friendly Leasing Market



One other perk that’s driving demand relates to the ease of ownership for property investors—once the property is purchased of course. You, as the property owner, carry less of the expense and maintenance than the tenant as previously mentioned. This means that you don’t have to pay specifically for insurance that covers any mishaps that occur during business operations. Plus, without having to pay to repurpose the building to meet the requirements of the tenant’s business, you’re reaping a higher profit.


E-commerce Growth



Lastly, as you may have noticed over the last three years, E-commerce has risen to new heights. Without a doubt, large and small online businesses have enjoyed success for quite some time, but they have increasingly taken on a solid part of our economy. Therefore, the need to store and ship merchandise has driven the market for industrial real estate, especially if the properties are located close to transportation routes or population centres.

Are you considering investing in industrial real estate? We can help you with locating a property that’s for sale and negotiating the final steps toward ownership. Contact us today for more information about how we assist our clients with successful property investments.

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