Ottawa’s industrial availability rate rose nearly a full percentage point in 2022 as a number of new projects boosted the city’s warehouse inventory, but rents continued their steady climb amid an ongoing wave of demand, CBRE said this week.
The capital’s industrial availability rate hit 2.6 per cent in the fourth quarter, the real estate firm said in its latest national market report, up 90 basis points from a year earlier.
While that was the biggest jump in any major Canadian city, Ottawa continued to be a red-hot market as 2022 came to a close.
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Average net rents rose to $13.61 per square foot in the fourth quarter after cracking $13 for the first time in the previous three-month period, CBRE said.
The average sale price of $300.88 per square foot last quarter is also a record high, suggesting the market is showing no signs of slowing down despite nearly 300,000 square feet of new inventory coming online in 2022 and another 414,000 square feet currently under construction.
While that new space will take time to absorb, longtime real estate executive Shawn Hamilton told OBJ it won’t “alter the supply-demand dynamics” of the Ottawa market.
“I would suggest the demand for industrial space is still huge,” said Hamilton, Canderel’s Ottawa-based vice-president of business development. “I don’t anticipate rental rates to come off.”
About 30 per cent of the industrial space now in the pipeline is already pre-leased, CBRE says, “with several deals expected to close in the coming weeks.”
CBRE senior vice-president Louis Karam agreed “demand is still high” for industrial and warehouse property in the National Capital Region, which has become a destination of choice for e-commerce and logistics giants like Amazon and FedEx due to its close proximity to the massive Toronto and Montreal markets.
Karam said the completion of a 131,000-square-foot building at Avenue 31’s National Capital Business Park near Hunt Club Road pushed up the availability rate in the fourth quarter because roughly half the space remains to be leased after FedEx recently occupied the rest of the site.
Still, there was net absorption of nearly 24,000 square feet in the final three months of 2022.
Industrial land has been changing hands at record prices in areas such as Barrhaven and Kanata that weren’t traditionally seen as warehouse meccas, Hamilton added, signalling the flood of new construction is likely to continue for years to come.
“People are looking at the west end with the same lens that they’re looking at the south end as well as the east end,” he said. “This opens up the city for more industrial development.”