Winnipeg’s industrial vacancy rate is unlikely to change much because of the amount of older properties that no longer fit the need of potential tenants.
This “functionally challenged” space lacks the high-ceilings, modern loading bays and energy-efficient construction that clients are looking for, even though most of the buildings are in decent condition.
As this older space fails to be absorbed, industrial vacancies will likely remain around the current 3.7 per cent rate, according to Colliers International. “Existing product is not meeting the demands of tenants.” Colliers notes.
Last year, Winnipeg experienced negative absorption of nearly 190,000 square feet of industrial real estate, while 260,000 square feet of new space came to the market.
The highest vacancy rates are seen in the Northwest, Winnipeg’s dominant and oldest industrial zone, where 4.4 per cent of space was empty as of the end of 2013. New warehouse space, however, saw huge demand as three-quarters of the 150,000 square feet of Bentall Kennedy’s new multi-tenant distribution facility leased up quickly.
As Colliers notes, there is also strong tenant demand for 5,000 to 10,000 –square-foot stand-alone buildings with at least one to three acres of land. “This particular set of characteristics is often difficult to find in our market,” according to Gary Goodman, vice-president of Colliers’ Winnipeg office.
Colliers expects a “lull” in the industrial market this year as tenants wait for new product to come on stream in both the northwest and southwest in 2015.
Winnipeg has an inventory of 80 million square feet of industrial space.
Average lease rates remain at $5.75 per square foot, with higher rents asked for modern space.
