What's the latest in the Ottawa industrial market?

The Ottawa industrial sector saw its vacancy rise by 0.6% annually to reach 2% in Q4, attesting to the development community’s confidence in the market, according to Avison Young.

With a total of 1 million square feet of space, the region’s vacancy rate was at its highest since the 2.2% registered in Q3 2020.

“For the first time in many years Ottawa’s Industrial vacancy rate inched up to the 2% mark,” Avison Young said.

This increase in vacancy paves the way for balanced conditions in the region’s industrial market, Avison Young added.

“With several new projects, totalling over 2 million sf, already in pre-leasing we can expect to see a bit more choice for those tenants looking to upgrade their leasehold interests in this market and we start to see an approach to a more balanced industrial market.”

Amid a 15.1% office availability rate in Ottawa, local developers are taking matters into their own hands by considering office-to-residential #conversions to tackle the city's housing crisis. Read the news with @CMPMagazine: https://t.co/H6sUcIMazL#AdaptiveReuse #AYdifference

— Avison Young | Canada (@AY_Canada) November 22, 2023

The region’s total industrial investment volume has increased by 84% on a quarterly basis, totalling $95 million.

“Compared to last year’s robust $352 million, the 2023 total investment volume has fallen to just $190 million – a predictable decrease of $162 million, given the Bank of Canada current interest rates policies,” Avison Young said.

For the Ottawa industrial market, 2024 will likely be characterized by caution.

“The slight uptick in investment activity in Q4 can be attributed the inevitable narrowing of the bid/ask gap that had to close as sellers and buyers were under pressure to make balance sheet moves at the end of the year,” Avison Young said.

“We will not see significant investment level gains until likely on the 3rd quarter next year with signs pointing to the Bank of Canada relaxing its interest rate policy.”