Canada’s industrial asset vacancies reach historic lows this year

by Ephraim Vecina on 07 Jun 2019

With multiple indicators hinting at robust performance for the rest of this year, Canada’s industrial properties have seen a record-low vacancy rate of 3% during Q1 2019, according to a recent analysis by Avison Young.

Stability and growth prospects for the asset class are extremely positive, with supply scarcity being the dominant condition. The Avison Young survey found that 10 of the 11 markets studied had lower vacancy levels in the single digits, and that four of these had rates well below the national average.

Indeed, three Canadian markets – namely, Vancouver (1.2%), Toronto (1.5%), and Ottawa (1.6%) – exhibited the lowest vacancy rates throughout North America during the first quarter.

And this might be just the beginning, as logistics ventures’ need for wide open spaces is likely to inflame even greater competition.

“E-commerce remains the industrial sector’s catalyst for success as retailers and developers strive to perfect the supply chain,” Avison Young COO (Canadian operations) Mark Fieder explained, pointing at these companies’ demand for distribution/fulfilment facilities located on or near major urban centres.

“This situation is most apparent in Toronto – and in Vancouver, where strata units increasingly offer the only opportunities for developers to justify their land costs. A focus on multi-storey facilities may be the next logical step to make the most of restricted urban sites.”

Earlier this year, CBRE Ltd. warned that Vancouver could “literally run out” of industrial-use expanses by the next decade.

“There is a critical shortage of industrial land in Vancouver,” CBRE Canada vice chairman Paul Morassutti told Bloomberg. “It was our estimation that they could potentially, literally run out of industrial land by the early 2020s.”

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