Calgary’s industrial real estate market posted its eight consecutive quarter of positive net absorption in the fourth quarter of 2018, according to commercial real estate firm CBRE.
A report by the company said absorption – the change in occupied space – was 455,941 square feet during the quarter, which moved the annual total to 3.1 million square feet.
“This represents Calgary’s most robust yearly absorption since 2012 where 3.5 million square feet was registered,” said CBRE. “Largely driven by e-commerce retailers, this type of demand is expected to continue well into 2019. It is worth noting that while not formally reported as absorption herein, there are a number of large-scale transactions being finalized into early 2019 by various retailers, third party logistics and consumer product companies.
“Q4 marked the completion and grand opening of Amazon’s fulfilment centre in Nose Creek Business Park. This delivery has acted to spur additional market activity from various vendors, suppliers, transportation and courier companies looking to capitalize on last mile delivery services to Calgarians.”
CBRE said small bay strata development is still on the rise with a number of new projects announced and under construction.
“While still a relatively new concept to Calgary, small bay ownership has been well received by local businesses and entrepreneurs,” said the report. “Demand for strata units is expected to remain relatively strong in the coming years. Notwithstanding, imminent changes in interest rates and access to capital may have an impact on these developments in the future.”
At the close of 2018, the Calgary industrial real estate market saw more than 2.1 million square feet of new supply in the quarter, the second largest amount of new supply delivered in a single quarter since an historical high of 3.1 million square feet in the fourth quarter of 2015.
CBRE said 2018 saw 3.3 million square feet of new industrial real estate product delivered on the market.
The influx of new supply raised the availability of rate from seven per cent to 8.2 per cent quarter over quarter.
– Mario Toneguzzi for Calgary’s Business