Canadian industrial vacancy expected to exceed 7%

Canadian industrial real estate vacancy is expected to continue to climb in 2010.
According to Avison Young's National 2010 Forecast, released today, the industrial leasing market was hit hard last year, and vacancy should rise to 7% by the end of this year. The national vacancy rate, which applies to 1.9 billion square feet in 11 major cities, rose 110 basis points (bps) to 6.3% in 2009. Most of the increases occurred in Western Canada.
Edmonton witnessed the biggest jump as industrial vacancy in the Alberta capital rose 300 bps to 4.2%. But Rob Iwaschuk, an Avison Young principal based in the firm's Edmonton office, expects the market to stabilize as a large amount of sublease space released in the past year continues to put downward pressure on rental rates.
With a number of stalled projects in the Alberta oilsands now back on track, activity in Edmonton's industrial real estate market should pick up. The city serves as an important oilsands supply and distribution centre.
Meanwhile, Vancouver's industrial vacancy climbed 200 bps to 4.4%, but still ranked among the lowest in North America. But Vancouver, traditionally one of the tightest industrial markets on the continent, is already show signs of a notable rebound due to limited supply.
Calgary's industrial vacancy is expected to exceed the national average and reach 7.5%. As a result, construction of some 22 million square feet of new projects will be postponed until sufficient preleasing is secured.
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