- What Canada’s national industrial availability rate grew to 5.1% in Q1
- Why An influx of supply at the end of 2023 was met with an easing in leasing activity
- What next Demand is expected to remain steady, with investors favouring stable, low-risk sectors like industrial and multifamily
The national industrial availability rate ticked up to 5.1% during the first quarter following a record wave of supply at the end of 2023, Altus Group said in a new report.
The rate increased 0.8 percentage points over the prior quarter. While the amount of new supply delivered in the first quarter returned to a more normal 6.4m sq ft – close to the 6.6m sq ft seen a year prior – leasing activity levelled out, and rents were flat through the first quarter.
Demand for industrial properties remains strong in most major markets, Altus said, as investors continued to seek out assets “at certain price thresholds” amidst high borrowing rates.
“Furthermore, the growth in e-commerce, changing consumer behaviour, and challenges associated with an aging and limited industrial infrastructure are expected to continue to drive the long-term demand for modern industrial facilities,” the firm said in the report.
More supply on the way
The first quarter saw 34 new industrial buildings totalling 6.4m sq ft come online. Some 46% of that space was pre-leased. Most of the properties are in Toronto (2.5m sq ft), Montreal (1.6m sq ft) and Southwestern Ontario (1.1m sq ft).
More supply is coming, with 146 projects in the construction pipeline totalling 28msq ft. Of that, 34% is pre-leased.
Vancouver has the highest level of pre-leasing, at 60%. Toronto and Southwestern Ontario trail behind, with less than 40% pre-leased in each market.
Looking ahead, demand is expected to remain steady as investors “continue to favour stable, low-risk asset classes such as multi-family and industrial,” Altus said. Cost-related hurdles remain, but the underlying fundamentals in those asset types hold strong.