CALGARY, ALTA. — Calgary’s industrial real estate sector is witnessing a surge in optimism, positioning itself as Canada’s cost-effective distribution hub, states a new report from Avison Young.
The city is gaining traction for having distribution space asking rates considerably lower than those in Vancouver and Toronto.
The past year has seen Calgary’s industrial market maintain a robust health, notably in Q3 2023. The city reported a minor rise in the overall vacancy rate, reaching 2.96 per cent, which can be attributed partly to the introduction of new construction.
However, this has not dented the market’s resilience, with continued strong leasing interest and investment activity, the report reads.
In figures, Calgary recorded 638,061 square feet of positive absorption for Q3, bringing the year-to-date total to an approximate 1.9 million square feet. The report noted that consistent quarterly absorption, averaging around 600,000 square feet, signifies a stabilization following the previous year’s activity.
The city also added 1.6 million square feet of new construction projects during this quarter. Almost half of these new deliveries were prelease. Approximately 5.5 million square feet are currently under construction.
In terms of investments, 2023 has been slightly more muted compared to the record-breaking previous year. The year-to-date investment stands at approximately $851 million, which, while slightly below last year’s benchmark of $1 billion at this juncture, is still notable, Avison Young states. Moreover, despite rising interest rates, the city’s industrial sector remains a hotspot for capital allocation, mainly driven by private owner-user groups.