Market overview

01 Vacancy declines as demand surges

Greater Edmonton’s industrial vacancy declined from 4.4% in Q2 2024 to 4.1% in Q3 2024. The market recorded a net absorption of 706,377 sf, reflecting the tightening of available space as demand for industrial properties outpaces supply. Nisku saw a dramatic shift in quarterly absorption, increasing from -3,279 sf in Q2 2024 to 539,159 square feet in Q3 2024. With demand outpacing supply, renewals are becoming more common as tenants face a more competitive leasing market. As businesses look to secure leases or renew existing ones to avoid relocation challenges, landlords could take advantage of tighter market conditions by increasing rents. 

 

02 Interest rate decrease drives industrial expansion

The Bank of Canada's recent 50-basis-point interest rate cut to 3.75% could result in an increase in construction starts and support for ongoing projects in a market experiencing compressed vacancies due to high demand. With the reduced cost of borrowing, the number of properties under construction in the Edmonton region, currently at 2.3 million square feet (msf), is expected to rise. Notably, the growing demand in the oil and gas sector presents opportunities for new developments, such as warehouses, storage facilities, and distribution centres. An example is the Building 41 Business Park in Nisku, a 366,932-sf warehouse scheduled for completion in November 2024.

 

03 Renewed optimism in Edmonton’s industrial market

Edmonton’s real estate market shows stable growth, with rent increases moderating to 2% annually post-2024. Net market rents average $12.40 per square foot (psf), the lowest in Western Canada, making it attractive for businesses and investors seeking cost-effective expansion. For example, English Bay Blending relocated to the Stony Plain area, drawn by the Greater Edmonton region’s lower operational costs. The average asking cap rate for properties is 7%, with transaction pricing around $151 psf, significantly below the national average of $270.