Appetite for the region's industrial spaces is expected to intensify
The Ottawa industrial market has exhibited robust demand over the past year, with the total vacancy rate hovering at around 1.5% during the first quarter of the year, according to Avison Young.
Absorption during Q1 was at around 29,000 square feet, and the appetite for space in the region is not expected to wane any time soon.
Roughly 61,000 sf across five buildings was added to the region’s supply, Avison Young reported. As of the end of the first quarter, an additional 332,000 sf of industrial space began construction across seven projects.
“Many players have decided to acquire land and build in the near future – providing choices in warehousing that has not been as abundant in previous years,” Avison Young said.
“As development levels steadily increased throughout 2022, new supply in 2023 will satisfy the strong demand for large and modern distribution facilities. Furthermore, sales volumes remain robust.”
Ottawa’s average gross asking rent per square foot (psf) was at $21.70. This includes $7.43 psf in average additional rent.
“With rental rates having stabilized over the last year, it would appear that the industrial market may have reached a peak in Ottawa, in particular for larger offerings,” Avison Young said, while stressing that “we still anticipate some upward pressure on rents for small bay industrial units as they continue to be in short supply.”
This has crucial implications for market players with leases that are coming to an end soon.
“Tenants approaching renewal may still face significant increases in net rent as they come off rental rates that were significantly lower than current offerings,” Avison Young said. “Scarcity in the market leaves little room for tenants looking to negotiate.”
