Calgary industrial real estate absorption has returned to normal compared to a hectic pace set a year ago, says a new report from Avison Young.

The Calgary market recorded 638,061 square feet of positive absorption in the third quarter and has a year-to-date total of approximately one million sf. Net absorption exceeded five million sf in the third quarter of 2022, according to the Avison Young report.

The market is slowly becoming more balanced as Calgary provides a cost-effective Canadian distribution hub with asking rates significantly lower than those in Vancouver and Toronto. (Firms that prefer to invest in Vancouver have taken up millions of square feet in Calgary instead due to supply and demand pressures and high development and lease costs on the West Coast.)

New construction deliveries added 1.6 msf to the Calgary market in the third quarter with 49% preleased. The deliveries pushed the vacancy rate slightly upward quarter-over-quarter, to 2.96%.

Approximately 5.5 msf is under construction, but year-to-date investment has dropped to $851 million from more than $1 billion in the first nine months of 2022.

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