Calgary industrial market report

Calgary industrial market trends

 

After a relatively slow start to the year, the industrial market accelerated significantly in Q4 with the strongest quarter for absorption since Q3 2022. The market is showing signs of healthy demand, with declining vacancy and strong preleasing activity. Meanwhile, the delivery of new inventory dropped off considerably in 2025 as developers displayed a strategic shift to disciplined development over speculation.

01. Limited availability of large bays

Developers have taken a conservative approach in 2025 resulting in a decline in construction starts for distribution centres and big bay multi-tenant facilities. Meanwhile, demand for mid and small bay product has been growing. Rents for both categories are seeing upward pressure, along with increased leasing activity. 
With the development pipeline for large format industrial at relatively low levels plus a sustained leasing environment, it’s possible the market could pivot back to being under supplied in the coming year.

 

02. High levels of sublease space

While the overall market is tightening, subleases are becoming a more dominant slice of what remains available. The volume of sublease inventory has expanded in 2025 and currently sits at 1.8 million sf and a sublease vacancy rate of 1.03%. Sublease space is rising as firms transition from 'just-in-case' inventory buffers to leaner operational discipline and financial incentives for consolidating space. This right-sizing is expected to persist in the near term as companies prioritize efficiency over volume. As a result, average asking rents for sublease space softened to $9.68 per square foot in Q4 2025, down from $10.38 a year prior.

 

03. Elevated demand meets stable rent

Overall average asking rents remained stable throughout 2025 and are currently sitting at $11.63 per square foot. While demand remains resilient, the supply side has hesitated to launch new speculative projects given current rental rates and elevated construction costs. However, this trend could shift as federal incentives gain traction. Specifically, the Budget 2025 Productivity Super-Deduction, which introduces a temporary 100% immediate expensing for eligible manufacturing and processing buildings. This accelerated depreciation, combined with a lagging supply pipeline, may lead to a rapid tightening of the market.