If you think relief on unsatiable demand for industrial assets in Vancouver and Toronto is on the horizon, think again. Vacancy in major Alberta markets is also down, further cementing industrial's impressive influence on commercial investment across Western Canada.
The fourth quarter of 2018 marked 22 consecutive quarters of positive industrial absorption in Vancouver, with no signs of slowing down, according to Colliers International's National Industrial Dashboard Report. Vancouver’s industrial vacancy in the fourth quarter of both 2017 and 2018 remained below the five-year average of 2.4 per cent and 10-year average of 3.2 per cent.
Absorption decreased from 1,313,282 square feet in the fourth quarter 0f 2017 to 655,752 square feet, likely due to less vacant space available for lease year-over-year. More than 800,000 square feet of new space hit the market in the latest quarter, with 16 per cent of it built-to-suit. Of the remaining new supply, 83 per cent was pre-sold or pre-leased.
“The weighted average asking triple net rent increased by 14.8 per cent year-over-year, the largest year-over-year increase in the past five years,” reads the report.
Toronto remains the only city in Canada with a tighter industrial market than Vancouver, maintained a vacancy rate below 1 per cent in both 2017 and 2018. Tenant demand has pushed rental rates up from an average of $6.31 per square foot to $7.26. Speculative building continues to be fueled by the city’s long-term supply and demand imbalance.
Calgary’s vacancy rate decreased for the ninth consecutive quarter in 2018, reaching a low of 4.9 per cent in the fourth quarter. Warehouses continue to be the most desirable industrial asset as the city establishes itself as a growing distribution hub for e-commerce in Western Canada.
“It is hard to ignore the positive message from developers and landlords portrayed by their continual investment in Calgary’s industrial market,” the report states.
Colliers’ believes Edmonton’s decreased vacancy rate – down one per cent year-over-year, from 7.6 to 6.6 per cent – is a sign of faith in the city’s economy, despite its current turbulent economic climate hit by the halting of the Trans Mountain pipeline.