How is Calgary's industrial market faring?

Despite an anticipated steady increase in the region’s vacancy levels, the Calgary industrial property market continues to benefit from sustained demand and continued optimism, according to Avison Young.

“Relative to the frantic pace Calgary’s industrial market saw in 2022, market activity in the first two quarters of 2023 has decreased,” Avison Young said in its latest market report. “Net absorption has levelled off from the record-breaking previous year as overall vacancy has risen.”

The market’s total industrial vacancy rate went up by 0.15% on a quarterly basis to reach 2.46% in Q2 2023, while the overall availability rate ticked up by 0.13% to 4.27%.

On the other hand, the market saw 656,276 square feet of positive absorption in the second quarter, pushing total year-to-date positive absorption up to 1.3 million sf.

“As we enter the back half of the year, the pre-leasing of several large warehouse completions will likely boost quarterly absorption,” Avison Young said. “Vacancy is expected to maintain a slow and steady increase.”

Michel Durand, Founder and CEO of MCommercial, said that while the commercial sector continued to labour under familiar struggles from 2022, there was room for optimism on the horizon.https://t.co/BDngGPTZL7#mortgagenews #commercialmarket #mortgageinsights #interestrates

— Canadian Mortgage Professional Magazine (@CMPmagazine) May 15, 2023

While the market will labour under the elevated rate environment and sustained economic uncertainty, “quarterly investment in improved industrial properties rose in Q2, with the largest acquisitions coming from pension funds,” Avison Young said.

“Limited inventory in the region will continue to sustain both lease rates and sale prices, which bodes well for Calgary’s industrial market,” the report noted. “Outside pressures aside, industrial continues to be a preferred asset category among all investor types and Calgary is situated as a preferred destination for future growth.”