If you’ve read any of our previous blog articles, you’ll know we like to post unique content that isn’t readily available in other places. For example, we have written recently about electric cars and how they pose a long term threat to Alberta’s economy. We have also written extensively about how Edmonton’s commercial real estate market fluctuates with the price of oil. Our most popular article was when we reported on 4 office buildings that sold for astonishing prices.
We typically write articles that can be read quickly so we often steer away from data-heavy posts. That said, we have had a few people ask us recently about the state of the industrial market in Edmonton so we’re dedicating an entire post to that topic.
It’s no surprise that our industrial market has been under pressure since oil prices started declining in 2014. Looking at the graphs below, asking rates per square foot have been declining over the past two years. As expected, the vacancy rate has also been climbing.
On average, industrial lease rates in Edmonton are $9.07 / square foot and the vacancy rate is 7.10%1. While the vacancy rate has risen over the past few years, it’s important to note where that stands in the context of other markets. Calgary has also had rising industrial vacancy rates, which depending on the sub-market currently ranges from 7.69% to 12.88%. Interestingly, the 10 year historical average for vacancy rate across the U.S. is 8.3%.
Anecdotally, we are still seeing a healthy amount of demand. The increased supply on the market means that tenants and buyers in the market have options to choose from, a far cry from 2013 – 2014 when we had sub 3% vacancy. Considering all the various pressures impacting Alberta’s economy, our industrial market has still held up quite well.
1This is a market wide average and does not segregate for sub-markets, size or quality of the building. For example, the market for free-standing industrial buildings with large land components will be different than the market for smaller industrial properties in multi-tenant properties.
Information has been obtained by sources deemed reliable but is not warranted to be so and may change without notice. Information contained herein is not intended to be real estate advice and may not form part of a future contract. Readers are strongly encouraged to obtain independent advice. Full disclaimer is available here.