Calgary’s rapid population growth has sparked a surge in industrial real estate development, driving significant expansion in warehousing, distribution and logistics space, says Avison Young.

The commercial real estate advisory firm’s recently released data shows that Alberta’s population boom, which began in 2022, has added approximately 500,000 new residents and pushed the province’s population past five million. Growth peaked at 4.4% in the second and third quarters of 2024, maintaining Alberta’s position as Canada’s fastest-growing province.

The Calgary metropolitan area alone now accounts for about 1.8 million residents, intensifying demand for industrial space, said Avison Young, which based the findings on Alberta government data and its own market intelligence.

In response to the population growth, the Calgary industrial market has added roughly 20 million square feet of new supply since 2022. However, this wave of development has been followed by a notable slowdown in construction activity, as vacancy rates climbed back into a more balanced range of 4% to 5%.

Although national population growth is expected to ease, Alberta is projected to remain a leader, with a stable mid-term growth rate of about 1.5%. As demographic trends normalize, industrial project deliveries have declined sharply over the past year, said the company.

If the current slowdown in development continues, the region could face a structural undersupply of industrial space in the years ahead.

The newly released data comes after Avison Young reported that Calgary’s industrial market posted its strongest absorption in three years in the fourth quarter 2025.

Leasing activity surged late in the year and pushed annual absorption to about 3.3 msf, according to the commercial real estate advisory firm.

The fourth quarter delivered the strongest absorption since Q3 2022, led primarily by leasing in the Balzac and Southeast submarkets. Balzac, Alta., a bedroom community located north of the city, is considered part of the Calgary industrial market.

Avison Young noted that overall average asking rents remained stable throughout 2025 at $11.63 per square foot. Elevated construction costs and current rental levels have limited new speculative development, though federal incentives — including the Budget 2025 Productivity Super-Deduction allowing immediate expensing for eligible manufacturing and processing buildings — could spur activity. With a relatively thin supply pipeline, the firm said, the market could tighten quickly if development accelerates.

Pictured: XTL Transport warehouse in Balzac, Alta.

Photo: XTL