Canada’s industrial real estate leasing supply risk remained elevated in the second quarter of 2024, says a Morguard report.

National industrial availability rose 50 basis points to 4.2% during the period. That rise is in line with the 15-year industrial average. But availability has risen steadily over the past two years.

“Industrial construction ramped up recently, resulting in increased supply risk,” said Morguard.

Approximately four million square feet of new supply was completed during the second quarter. Although that total was down from 10 million sf delivered in the first quarter, constructions completions are expected to increase considerably during the rest of 2024.

“As a result, supply risk will rise,” said Morguard.

About 33.4 msf of new supply was under construction at mid-year 2024. Due to relatively weak national economic growth, industrial leasing demand will probably continue to fall short of supply while rent growth continues to ease.

A spike in rental rates and all-time low vacancy in 2022 prompted a surge in new construction. But leasing demand has softened since then, resulting in the continued supply risk, said Morguard.

The report was headed by Keith Reading, Morguard’s senior research director.

Photo: Avison Young