Edmonton Industrial Market Report Q4 2021

Edmonton Industrial Market Report Q4 2021 January 24, 2022

The industrial sector in Edmonton and the surrounding areas have experienced growth in occupancy for the sixth quarter in a row with buildings coming off the market quickly if they are functional and priced correctly.

The Edmonton Industrial market had a strong pace for lease and sale activity to finish 2021 due to the increasingly healthy warehousing and distribution sectors. The year-over-year vacancy rate has fallen 2.6% since the fourth quarter of 2020, which suggests the availability of industrial space will continue to shrink through 2022.

Some notable news from 2021 includes two major institutional investors buying up industrial opportunities in the Edmonton area. This year saw the sale of two class A, new generation warehousing and distribution complexes: Northport Business Park and Henday Industrial Park. These two sales comprised a combined 137 acres and a building area of 1.5 million square feet, with lower-than-average cap rates of 5.7% and 5.5% respectively. With more institutional investors taking advantage of the Edmonton market amidst the increasing difficulty of finding deals in other more crowded markets, we anticipate a further compression of cap rates in 2022, with the potential to reach sub-5% averages for institutional-grade properties.

Some notable news from 2021 includes two major institutional investors buying up industrial opportunities in the Edmonton area. This year saw the sale of two class A, new generation warehousing and distribution complexes: Northport Business Park and Henday Industrial Park. These two sales comprised a combined 137 acres and a building area of 1.5 million square feet, with lower-than-average cap rates of 5.7% and 5.5% respectively. With more institutional investors taking advantage of the Edmonton market amidst the increasing difficulty of finding deals in other more crowded markets, we anticipate a further compression of cap rates in 2022, with the potential to reach sub-5% averages for institutional-grade properties. 

Looking forward, as confidence returns to those in the industrial market with continued investment in major industries, coupled with strong energy prices and a healthy job market, it will become increasingly difficult to find high quality space for great value as 2022 progresses and groups continue to take advantage of market conditions. Through 2022, large users over 100,000 square feet will find little out there for quality options, resulting in an anticipated spur in land sales and increased development for class-A industrial.

 

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