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Commercial Property Insider

Q1 2024 ┃Edmonton Industrial Market Report

5 Minute Read

▲ $193.07 /SF*
AVERAGE SALES PRICE

▼ 4.30%
VACANCY RATE

▼ $10.54 /SF
NET ASKING LEASE RATE

◌ 6.75% -7.75%
CAP RATES | CLASS B

Sales volumes reflect interest rate shock, leasing activity surges

INDUSTRIAL MARKET OUTLOOK

  • The lagging effects of Bank of Canada’s 5.0% peak interest rates caused a drop in sales transaction volume in Q1 compared to this time last year. For properties valued under $4,000,000, the sales dollar volume is down to 40.2% of the prior year ($25,282,500; $62,846,547), the number of transactions is down to 41.4% (12; 29), and average $/SF is up 18.4% ($193.07/SF; $163.07/SF), reflecting sales negotiated during the higher interest rate environment.
  • Leasing activity remained strong, with the vacancy rate declining to 4.30% and Edmonton experiencing a positive net absorption for the 15th consecutive quarter.
  • Small users under 50,000 SF were the primary drivers of leasing activity within Edmonton proper.

AVERAGE INDUSTRIAL LEASE RATES VS VACANCY RATE 

Average Edmonton Commercial Real Estate (Industrial) Lease Rate vs Vacancy Rate

A NATIONAL COMPARISON

The national average industrial rental rate is $15.63/SF; however more markets are experiencing a rental rate contraction. There is an overall decline in construction, as high interest rates, a shortage of labour, national recession concerns, and high labour costs are expected to impact development. Despite a national softening trend, Edmonton is well positioned for the next two quarters as new developments reach completion, increasing the available space, and providing new business growth opportunities.

TRENDS

Alberta is currently experiencing the second highest net migration in all of Canada, primarily due to the affordability of housing. The accumulated effects of net migration are starting to show visible strains on multiple areas of the economy; including housing, rising rents, and a high demand for health care services. Net migration is one of the leading indicators for economic growth. What this means for industrial real estate is that we anticipate a strengthened demand for services and industrial space as our Edmonton economy continues to grow.

AVERAGE SALES PRICE ($/SF)
Freestanding Edmonton Industrial Under $4M

Average Edmonton Commercial Real Estate (Industrial) Sales Price $/SF

SALES DOLLAR VOLUME YEAR TO DATE
Freestanding Edmonton Industrial Under $4M

Average Edmonton Commercial Real Estate (Industrial) Sales Volume

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