E-commerce and big box retailers led growth in Canada’s core industrial markets during 2015 as large bay warehouse space experienced the greatest demand.
This trend is expected to continue through 2016, according to CBRE’s Industrial MarketView Q4 2015 report, as transportation, retail and logistics groups move towards core markets to establish centrally located distribution centers that are highway accessible.
Retailers are expected to continue working towards managing same day or near same day delivery within the country’s largest urban markets. Retailers have also begun evaluating small bay facilities in urban markets to reduce delivery time, driving more interest in buildings close to urban cores.
Overall, Vancouver and the Greater Toronto Area (GTA) led industrial demand in Canada in 2015, with Vancouver experiencing a total of 6.7 million square feet of positive net absorption, the highest rate on record. The GTA experienced 10.1 million square feet, with 4.9 million occurring in Q4 alone, the highest level of net absorption since 2008.
Meanwhile, the availability rate remained unchanged year-over-year at 5.6 per cent, despite economic challenges. A growing disparity between the high performance of core markets and the softening of markets in Calgary, Alberta and Edmonton is also occurring as industrial users in Alberta grapple with financial uncertainty. Calgary held up until 1.8 million square feet of new supply was delivered to the market in Q4, mainly as vacant speculative space.