Calgary’s industrial real estate market closed 2019 with increasing momentum as leasing activity in that sector continued to be a highlight for the commercial real estate industry.
A report by CBRE said net absorption, which is the change in occupied space, was a positive 746,808 square feet for the quarter, bringing the year end total to 2,041,579 square feet.
The fourth quarter of 2019 marked the12th consecutive quarter of positive absorption for the Greater Calgary market, said the report.
“Although a large amount of new product was absorbed, the availability rate increased slightly by 10 bps to 8.8 per cent. Of the last 12 quarters, Q4 resides in the top three for quantity of new supply delivered, totalling 886,833 square feet. This addition pushed the year-to-date figure to 3,166,210 square feet,” said CBRE.
The report said Calgary will continue to see similar demand from investors in 2020 with continued confidence in the Alberta industrial market as well as historic high pricing in the Toronto and Vancouver markets.
As the Calgary market reaches the tail-end of a significant development cycle, CBRE said 499,828 square feet remains in the under construction phase of development.
“Heading into 2020, we can expect various construction announcements and completions. Approximately 5,156, 811 square feet of industrial product remains in the planned and expected stage of development,” said the report.
“As new product continues to be delivered to meet market demand, average net asking rates have maintained a slight upward trend. This can be partially attributed to Class A product commanding a slight premium on net rental rates. Additionally, lower operating costs that are associated with newer inventory product are causing tenants to justify a premium on net rent.”
Mario Toneguzzi is a business reporter in Calgary.
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