- What Available industrial space remained high across Canada in Q2
- Why U.S. tariffs are curbing investor appetite for industrial property
- What next Over 100 industrial buildings are in the pipeline, with 70% of space unleased
Canada’s industrial property absorption reversed its two-quarter growth streak as U.S. tariffs dampened investor confidence.
In a report to be released later today, Altus Group found that Canada-wide, absorption entered negative territory during Q2 as the industrial availability rate simultaneously jumped up 50 basis points to 6.2%. These shifts came in the wake of President Donald Trump implementing tariffs on important Canadian industries such as steel, aluminum and automotive.
Sublets also experienced a rise during the quarter to reach 14.2% of overall industrial space, suggesting users were seeking to mitigate costs amid the economic uncertainty.
“Investors appeared to adopt a temporary wait-and-see approach as they strategically assessed the potential ramifications of committing to new investments during this volatile period,” Altus said. “The long-term effects of this policy shift were anticipated to be substantial, and the immediate consequence was a palpable hesitation within the investment community.”
Toronto saw its availability rate rise by 40 bps from the previous quarter to land at 4.9%. The market also saw 11 new industrial properties come online in Q2, totaling 2.2m sq ft, with 67% of that space vacant at the time of completion.
Montréal’s availability rate rose 40 bps quarter over quarter as well to 8%, while Vancouver experienced an uptick of 30 bps to land at 6.2%. Altus noted, however, that strong market fundamentals and a continued investor preference for large-bay properties suggest underlying demand for industrial assets is still strong in the Pacific city.
Out east, Halifax continued to have the highest level of unused industrial space in the country as the availability rate rose quarterly by 80 bps to hit 12.5%. Unlike other markets, Halifax saw no new completions in Q2, meaning the increase was fueled by tenants opting to vacate or sublet their spaces.
Ottawa, on the other hand, continued to have the lowest level of available industrial space at 3.4%. This represents a drop from the previous quarter of 40 bps, thanks to continued tenant demand and constrained supply.
More industrial space is on the way across the country, with 119 projects in the national pipeline, representing 18.3m sq ft of space. A significant portion of this – 70% – remains unleased.
