Calgary industrial market report

Calgary industrial market trends

 

Vacancy rising as market rebalances

Calgary's overall industrial vacancy rate increased to 4.4% in Q1 2024, up 0.8% from Q4 2023 and 2.1% from one year ago. With the delivery of over 8 msfof space in 2023, the balance between supply and demand has stabilized, but the small bay industrial market remains tight. This is exacerbated by a limited development pipeline for new product, and the robust demand for a finite supply of existing spaces.

As new developments are nearing completion, we expect to see a healthier equilibrium on the market, propelled by increasing vacancy rates. The market has observed an average vacancy rate of +/-6% over the past decade.
 

Upward pressure on rental rates eases

After approximately two years of steady rental rate growth, average asking rents are beginning to stabilize across the market. While overall rates are flattening, they are not expected to face downward pressure in the foreseeable future as demand in the market remains strong. However, rates are expected to keep rising in the small-bay segment, as options under 20,000 sf remain limited and the upward pressure is expected to continue. This could result in more users choosing to purchase their own property rather than facing increasing rates.

 

New supply anticipated in 2024 to meet demand

Calgary has experienced an unprecedented amount of new industrial construction deliveries over the past two years, as approximately 15 msfwere added to the inventory. Consequently, the number of properties currently under construction and in proposal stages has waned. The development pipeline currently sits at 2.8 msf, compared to 5.9 msf at this time last year. The Calgary region is well positioned to meet future demand due to the relatively quick permitting process compared to other major markets along with the scale of permit-ready development sites to build on.