North America’s industrial real estate market, including Calgary’s, is firing on all cylinders these days.
A report by commercial real estate firm Colliers International said positive demand drivers should lead to continued industrial occupancy gains into 2015 even with the large amount of supply slated to come online.
Calgary has 132 million square feet of industrial real estate inventory. The report said 1.1 million square feet of new supply was added in the third quarter of this year while 2.2 million square feet has been added year-to-date until the end of September. Also, 2.4 million square feet is under construction.
The third quarter absorption – the change in occupied space – in Calgary’s market was 975,054 square feet while it was 3.9 million square feet year-to-date. And the vacancy rate was 4.43 per cent at the end of September, up slightly from 4.39 per cent at the end of June.
“While the economic recovery in the U.S. is gaining momentum and positively affecting their industrial markets, the frenzied pace of activity in the Calgary market is relentless,” said Joe Binfet, managing director of Colliers International in Calgary.
“Calgary’s fundamentals for growth are solid as our industrial market is driven by distribution which is directly correlated to consumer confidence and consumer spending. Our industrial leasing team is seeing strong interest from e-commerce companies and logistics facilities looking for a presence in the High Plains Industrial Park. Industrial land remains in demand with little inventory in the primary markets and limited land available in the secondary markets outside of Calgary.”
The Colliers International North American Q3 Industrial Report said the vacancy rate in the U.S. is 7.5 per cent, down 0.2 per cent from the previous quarter, while Canada’s remains flat at 4.0 per cent.
Third quarter absorption was 60.4 million in the U.S. and 4.3 million in Canada. New supply was 36.3 million in the U.S. and 5.3 million in Canada. There is 140.2 million square feet under construction south of the border and 15.7 million square feet in Canada.
“The North American industrial market continued to fire on all cylinders in (the third quarter) driven by ongoing expansion in the manufacturing sector, strong auto sales, rising housing starts and robust growth in e-commerce, bolstering demand for bulk industrial and logistics facilities,” said the report.
“Projections for the key industrial economic indicators portend continued growth in the industrial sector through 2015.”