CBRE recently released its Canada Industrial Figures Q3 2024, which revealed that the national availability rate increased to average 4.4 per cent amid softer demand and more available new supply being delivered in the third quarter.
While the pace of quarterly increases slowed for the third consecutive quarter, the report noted that the national average availability rate currently stands at its highest level since Q2 2017. Softer demand and more available new supply being delivered, however, has lifted availability rates across every market year-over-year in Q3 2024.
Half of the tracked markets recorded over 200 bps year-over-year increases in their respective availability rates, were led by Halifax, Waterloo Region and Toronto. On a quarterly basis, modest decreases in availability were seen in Edmonton, Calgary and Ottawa while Waterloo Region held steady quarter-over-quarter.
The steady rise in sublease space began to plateau in the third quarter, according to the report, with the national sublet availability rate holding flat quarter-over-quarter at 0.7 per cent.
In Q3 2024, the steady rise in sublease space seen over the last few quarters slowed down, growing just 1.9 per cent quarter-over-quarter to total 14.1 million sq. ft. nationally. While the national sublet availability rate rose 40 bps year-over-year, on a quarterly basis it has remained unchanged at 0.7 per cent as of Q3 2024.
The report noted that national net absorption was positive in Q3 2024, totaling 1.9 million sq. ft. and mainly the result of pre-leased new supply that delivered over the quarter. Without the new supply in the third quarter, national net absorption would have likely totaled negative 1.5 million sq. ft. instead.
The national construction pipeline resumed its long-term downward trend and decreased 8.4 per cent quarter-over-quarter to total 32.0 million sq. ft. or 1.6 per cent of inventory. The report noted that speculative construction continues to make up the majority of the national pipeline at 74.3 per cent of total space under construction.
In Q3 2024, there were 4.4 million sq. ft. of new construction projects that began. Speculative developments in Toronto accounted for the largest share of the new projects totaling 2.6 million sq. ft.
In terms of new supply, it rebounded from last quarter’s temporary slowdown and rose to 7.3 million sq. ft. of deliveries in Q3 2024.
The national average asking net rental rate contracted for the second consecutive quarter, easing 3.8 per cent year-over-year to $15.67 per sq. ft. in Q3 2024. While asking net rents have moderated slightly from their peak, the national average remains well above levels from three years ago.
The Halifax market continued to lead rent growth in Canada and recorded an 11.2 per cent year-over-year increase in Q3 2024.
Sale prices contracted further in Q3 2024 with the national average declining 2.8 per cent year-over-year to $317.71 per sq. ft.
Healthy growth in average asking sale prices was seen in the smaller markets, led by London (+15.7 per cent year-over-year), Halifax (+11.1 per cent) and Winnipeg (+10.7 per cent). However, this was offset by decreases in some of the larger markets in Q3 2024.
