Tight supply and rising rents could boost deal flow for commercial lenders and brokers
Calgary’s industrial market tightened sharply in the third quarter, with vacancy falling to its lowest level in three years, according to a new Avison Young report.
Net absorption, the net amount of space taken up by tenants, reached 3.6 million sq. ft. That was the strongest quarterly result since Q3 2022. Total vacancy fell to 2.9%, down 1.2 percentage points from the previous quarter and down from 4.7% a year earlier.
“Robust tenant demand absorbed most newly delivered space while also reducing existing vacancies,” the report said.
Supply stays tight
The availability rate, which includes space that is vacant or will soon be, dropped to 3.5%. Sublease space is limited at 0.6%, and the report said rents are firming as competition for quality space grows.
Developers have 3.8 million sq. ft. under construction across 16 projects. About 2.0 million sq. ft., or 52%, is already preleased. Only 1.4 million sq. ft. has been delivered so far in 2026, well below the five-year average of roughly 4.3 million sq. ft.
Large-bay space is especially scarce, and the report said large-format users may need to consider design-build solutions. It also cited a shortage of development-ready, serviced industrial land, particularly within city limits.
Vacancy fell in every submarket from a year earlier. Rocky View County/Balzac saw the biggest improvement, dropping from 12.2% to 4.5%. That submarket also holds more than half of the construction pipeline, at 2.1 million sq. ft.
Capital follows demand
Industrial building investment totalled $220 million in the quarter, according to figures from The Network. That brings the year-to-date total to $861 million, about 10% above the $785 million transacted in the same period of 2025.
Among the quarter’s notable deals, Dream Industrial bought a 159,650-sq.-ft. Southeast building for $31.25 million, or $196 per sq. ft. Avison Young also brokered new direct leases of 498,000, 486,000 and 365,000 sq. ft.
Other brokerages see a similar trend, though their numbers differ because methods vary. CBRE reported 3.8 million sq. ft. of absorption and a 3.6% availability rate. It also found owner-user sale options fell 27.7% to 65. Altus Group put Calgary’s availability at 4.9%, down 140 basis points from a year earlier. It put national availability at 6.2%.
What it means for borrowers and lenders
The Avison Young report listed rising rents, normalized borrowing costs and improved liquidity among the factors strengthening development spreads. It named macroeconomic uncertainty, inflation and elevated construction costs as headwinds.
Rates remain a variable. The Bank of Canada held its policy rate at 2.25% on Sept. 2. It said upside inflation risks had increased and long-term bond yields had moved higher. Its next decision is scheduled for Oct. 28.
For brokers with industrial owner-user, investor or developer clients, the data points to a market where limited options and firmer rents may affect timing and financing. The report advised tenants with upcoming lease expiries or expansion plans to start their search early.
