More Canadian industrial users are opting to own their properties rather than lease, according to new market analysis from Avison Young.

Owner-user industrial property sales activity has increased since the Bank of Canada launched a series of rate cuts in June 2024, said the Toronto-based global commercial real estate services firm. Bank of Canada interest-rate increases between March 2022 and July 2023 led to a drop in owner-users’ sales volume, according to the analysis.

The renewed appetite for ownership is also being driven by high lease rates, limited availability, and owner-users’ desire for greater control over their properties and long-term financial stability in the face of potential market disruption.

Low interest rates between 2020 and 2021 encouraged more industrial business owner-users to acquire their own premises. As a result, owner-users’ property sales transaction volume almost peaked at $2.5 billion in 2021.

With industrial vacancies at historic lows and rents having increased substantially, many users view ownership as “relatively more attractive,” said Avison Young. The company said Canada’s cumulative industrial rents have soared 81% since 2018.

Borrowing costs are still relatively high, but companies in key markets see value in acquiring properties, said the company.

“The latest Bank of Canada policy rate cut on January 29th is good news for those financing the acquisition of a property, and we could see more acquisitions by end-users,” said Avison Young. “However, today’s market landscape is quite different than back in 2021.”

Industrials users now have more options when it comes to selecting quality premises, while rents have stopped climbing and even declined 1.7% in 2024 compared to 2023 peak levels.

Uncertainty surrounding U.S. President Donald Trump’s threatened 25% tariffs on imports from Canada may push industrial use to choose the flexibility of a lease.

“For end users, the choice of leasing or owning has always been a complex one, and is even more so in the current context,” said Avison Young.

Pictured: Industrial strata property in Abbotsford, B.C.

Photo: Avison Young

Photo: Avison Young