Edmonton-area industrial real estate ‘skyrocketing’: report

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“Because we have a shortage of commercial properties, it’s starting to stimulate new developments, which is very exciting.”

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The industrial real estate market is booming in and around Edmonton, according to a new market report.

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Meanwhile, vacancies continue to rise as the retail market makes a slow comeback.

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Edmonton’s industrial market occupancy increased to 96.4% in the third quarter of 2022, NAI Commercial Real Estate said in the report, adding that land availability and prices are attracting investment from British Columbia, where rental rates are double those seen in the Edmonton market and the industrial vacancy rate is 0.2%.

Some of the biggest gains were found south of the city in Leduc and Nisku, but it still benefits the region, said Jeffrey Sundquist, president and CEO of the Edmonton Chamber of Commerce.

“That’s why regional collaboration is so essential,” Sundquist told Postmedia, adding that municipalities can benefit from breaking down the “virtual barriers” that separate them. “These businesses create jobs and economic prosperity that trickle down to the city proper in a variety of ways, including nightlife, retail stores, restaurants, public transportation, festivals, and more.”

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“They want to be close to the action”

Industrial vacancy rates in the greater Edmonton area have declined steadily from the last/fourth quarter of 2021 (4.6%) to the third quarter of 2022 (3.6%), according to the report, some of the largest gains being found south of the city.

The report recognized Leduc as a “major benefactor” of the industrial push with a vacancy rate last quarter of 4.7%, down from 6.3% during the same period.

For the Town of Leduc, oil and gas supply and service continues to be the primary driver of the trend, Director of Economic Development Harold Wilson told Postmedia.

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It is one of the mainstays in addition to proximity to the airport, the Queen Elizabeth II Freeway and an upcoming 65th Avenue interchange to connect to the corridor, he added.

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“They want to be close to the action or in that industry because they can have great suppliers as well,” he said. “Some of them might even know there are customers in the neighborhood, so that would be a draw.”

Additionally, the falling vacancy rate has spurred new commercial developments, he said, adding that the city has already seen $20 million in industrial permits in 2022, double the year’s figure. last.

An opportunity for residential space

The office market, on the other hand, has seen better days given the fallout from remote working during the COVID-19 pandemic, according to the report.

The reported vacancy rate for the greater Edmonton area was 9% in the last quarter of 2021 and gradually climbed to 9.6% in the third quarter of 2022. The same thing happened in downtown Edmonton. Edmonton, where the rate went from 10.1% to 11.7% and from 14.5% to 15.2% in the University and Garneau sector.

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Sundquist said the trend is concerning, but the chamber remains hopeful.

The chamber is encouraging employers to enact return-to-work plans, which in turn are fueling operations for downtown stores and businesses, he said, but as rates continue to climb, the area needs to be ready to invest.

“That means making sure our downtown is clean, safe and easy to get around,” he said, adding that the city still has work to do in that regard. “Prioritizing infrastructure repair spending and ensuring that the basics are executed exceptionally well helps secure investment from businesses and businesses outside of our city.

The city could also consider adapting downtown office towers for residential use, he said, adding that the chamber is asking council to encourage incentives for the pivot.

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“A transition to increased residential housing brings an influx of people and this is absolutely necessary to recover and revitalize the core,” he said.

“Begin to stimulate new developments”

The greater Edmonton area saw a slower rebound in the retail market with a vacancy rate of 4.3% this quarter, down from 4.8% in the last quarter of 2021, the report said.

NAI President Chad Snow said the trend points to an upcoming recovery in the capital with greater demand for brick-and-mortar stores for the type of products people prefer to buy in person.

Once again, Leduc stood out in this area with a vacancy rate that fell from 4.1% to 1.2% during the same period.

Similar to the industrial market, Wilson said higher occupancy is in turn fueling projects, and the city has already seen the value of commercial permits triple from 2021.

“Because we have a shortage of commercial properties, it’s starting to stimulate new developments, which is very exciting,” he said.

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@hamdiissawi

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