The Edmonton industrial market sustained its impressive streak, marking its 14th consecutive quarter of positive absorption, with 695k sf absorbed, and the introduction of 1,157,000 sf of new supply into the market. Of this new supply, 200,000 sf was pre-leased, which had consequently no significant impact on the current quarter absorption.
The South/Southeast and Nisku/Leduc submarkets experienced the most absorption, with 493,000 sf and 381,000 sf being positively absorbed, respectively. In contrast, the Northwest experienced negative absorption of 162,000 sf, marked by a new 298,000 sf vacancy and over half a million sf of sublet space. Central Edmonton witnessed a 150-bps drop in the vacancy rate to 3.7%. Conversely, Sherwood Park’s vacancy increased by 220-bps to 5.3%, a result from a new 120,000 sf multi-tenant building entering the market.
Edmonton's vacancy rate (quarter-over-quarter) remains stable at 4.4%, while surrounding municipalities saw an overall vacancy increase of 70-bps to 5.6%, contributing to a slight uptick of 20-bps for Greater Edmonton's vacancy rate, bringing the overall total to 4.7%.
Despite a year of economic uncertainty, new development activity shows no sign of slowing. In Q4, six buildings were completed, with an additional six scheduled for delivery in 2024, anticipating the addition of 1,365,000 sf of new supply. Notably, Panattoni achieved milestones in the Southeast, completing two state-of-the-art projects, buildings one and two in Fulton Creek Business Park, spanning 151,000 and 267,000 sf, respectively, both designed to be LEED certified.
The South market also welcomed the completion of industrial condos at Roper Crossing, adding 59,000 sf to the market. In Nisku, Hopewell completed Building M at Border Business Park, a 481,000 sf distribution warehouse representing nearly half of the new supply added to the Greater Edmonton market in Q4.
Construction remains healthy, with the South market seeing the development of three flex industrial buildings at Eastgate Crossing, adding 47,000 sf in Q1 2024. In the Southeast, K&H and Eagle Builders began the construction of The WIC, a cutting-edge industrial condo project scheduled for Q3 2024 delivery, featuring 11 units with a total size just under 100,000 sf. In the Northwest, Skyline REIT and Camgill are constructing the fourth addition to Skyline Rampart Business Park, a 97,000 sf best-in-class warehouse (Building 3). Additionally, QuadReal anticipates the delivery of Building 2B, a 254,000 sf warehouse, at Anthony Henday Business Park next quarter.
A prevalent theme over the past year has been uncertainty, with rising rates impacting costs and margins in construction and operation. However, signs of stabilization are emerging, and uncertainties are subsiding. Anticipating the Bank of Canada’s probable decrease in interest rates in the coming year, coupled with available land and cost advantages, we believe Edmonton's industrial market is well-positioned for a robust 2024 as investments in industrial spaces continue, reinforcing the demand for top-class facilities.