Driven by continued strong demand in multiple Canadian markets, the overall Canadian industrial market shows no signs of cooling.
Overall Canadian industrial vacancy remained at record lows in the second quarter – sitting at 1.2 percent, according to Cushman & Wakefield’s Q2 Industrial real estate report.
Toronto, Vancouver, Calgary and Montreal all saw declines in vacancy rates over the past year. Calgary saw the greatest decline, dropping from 6.4 percent in Q2 2021 to 3.9 percent in 2022.
Although absorption did decline this quarter compared to last, totals were still impressive at approximately 4.4 million square feet (msf). This slowdown reflects the fact that less and less space is becoming available to be leased and therefore absorbed into the market.
Also playing a role in the decreased amounts of absorption this quarter was a decline in the amount of new supply that arrived to the market in the second quarter of 2022, at just shy of 4.1 msf.
As vacancy in multiple markets is now hovering in the sub 2.0 percent range, this has had a substantial impact on posted net rents. Currently the overall Canadian average sits at $13.99 per square foot, approximately 28 percent higher than a year ago.
Industrial rents are the highest in Vancouver at $18 per square foot. Toronto is second most expensive at $15.24, while Montreal and Calgary fall below the national average at $11.92 and $10.63, respectively.