Both the Calgary and Edmonton industrial markets have been healthy this year as the Alberta economy slowly recovers.
A report by commercial real estate firm Colliers International says “there has been steady demand for large-bay distribution centres throughout the greater Calgary area, as the city continues to establish itself as a distribution hub serving a variety of other markets.”
In the second quarter of this year, vacancy decreased by 40 basis points to 5.1 per cent, down from 5.5 per cent in the first quarter.
“This drop in vacancy represents a year-over-year decrease of 30 basis points from the second quarter of 2017. The continued decline in vacancy also marks the seventh consecutive quarterly drop in vacancy since the Q4 2016,” says Colliers.
It adds that vacant space in the industrial market was pushed down to about 7.3 million square feet in the second quarter with the majority of vacant space accounted for by 38 large-bay listings in the market.
“The significant amount of large-bay lease activity that has occurred throughout 2018 has been a contributing factor to the approximately 1.64 million square feet of vacant space that has come onto the market since the Q2 2017,” says the report.
For the fourth straight quarter, Edmonton experienced positive absorption as the industrial market saw 103,607 square feet of positive absorption, dropping the overall vacancy to 6.4 per cent from 6.6 per cent a year ago.
“Southwest Edmonton drove the leasing activity with 420,360 square feet of absorption while the northwest experienced negative absorption of -320,241.The submarkets of SherwoodPark and Acheson also saw negative absorption at -80,029 and -72,735 (square feet) respectively,” says Colliers.
The commercial real estate firm says the value of industrial property sales in Edmonton was almost $190 million in the second quarter, a 62 per cent increase from $116 million in the first quarter. On a year-over-year basis, total investment value is negative 14 per cent.
Owner-user and investment sales are up by 50 per cent and 27 per cent respectively from the first quarter, while land sales decreased by 20 per cent. Average rental rates dipped slightly from $10.08 to $9.94, while sublease vacancy dropped from 0.7 per cent to 0.6 per cent.
Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.