The Calgary industrial real estate market has reported nine consecutive quarters of positive net absorption, with 649,080 square feet added in the first quarter of this year, according to CBRE Ltd.
The commercial real estate firm, in a first-quarter report, said the strong level of activity has led to a drop in the availability rate, which fell to 7.8 per cent – down from 8.2 per cent in the previous quarter.
“To accommodate a consumer shift towards embracing online shopping, Home Depot has secured a lease for a 418,346 square foot e-commerce fulfillment centre in High Plains Industrial Park,” said the CBRE report.
“Demand is set to remain high due to a number of large-scale users currently looking for e-commerce-related distribution space.”
The CBRE report said the net rentable area in the city is about 135.4 million square feet. New supply coming onto the market in the first quarter of the year was 178,536 square feet and there’s about 2.1 million square feet of industrial real estate space currently under construction. All of that construction is expected to be completed this year.
The average net rent per square foot has risen from $7.54 in the fourth quarter of 2018 to $7.61 in the first quarter of this year.
“Despite consistently strong overall market fundamentals, the small bay market remains vulnerable to underlying economic conditions,” said CBRE it its report. “As of Q1 2019, there are 550 available options under 20,000 square feet.
“Landlords are now being pressured to accept lower net rental rates in order to maintain market average gross rents for tenants due to rising property taxes, which are acting to erode net income and property values,” the company said.
– Mario Toneguzzi