Hamilton’s industrial market has been in a constant state of demand for the last 3 to 4 years. The market is made up of 623 buildings with a total inventory base of 41,409,634 SF. This calculation takes into account Hamilton proper as well as the submarket areas such as Ancaster, Waterdown, Dundas, and Stoney Creek. This base does not consider buildings that are smaller than 10,000 sf, nor does it include the active production capacity of Dofasco and Stelco. There is currently 643,000 sf vacant industrial space within the City which translates into a vacancy rate of roughly 1.6%.
There is speculation that the industrial vacancy rate will drop down below 1% by the end 2022. The large industrial team here at BBS is currently involved in 2 transactions that would remove 285,000 SF of vacant space from the market if successful. This would effectively take the vacancy rate down to 0.8%. There is breathing room expected in late 2022 / early 2023 as several industrial developers are building on spec.
In general, the high number of industrial sales can be attributed to GTA industrial investors. The top 4 largest deals since 2019 have been on behalf of investors looking to capitalize on the lower purchase prices in this market versus the GTA. One of Largest Industrial investment sales in recent years was the sale of the Northgate’s portfolio to Sunlife. These buildings totaled 307,000 sf in size and were sold at $111/sf in March of 2021. One of these properties was subsequently flipped for $198/sf in May of 2021.
Leasing has been catching up to the Sales market in terms of activity and upward trend on prices. The lack of buildings for sale or lease has forced businesses into a lease or even a design build opportunity. Current rates for medium sized functional facilities are averaging around $8.75/sf Net. Smaller format industry is trending towards $10.75/sf Net. Large format warehouse space within the older style warehouses inventory is averaging roughly $6.50/sf Net.
Expectations for Hamilton and the surrounding area is an increase in speculative construction to service the current demand for new functional manufacturing and warehouse space.
Source: Internal data.
