Ottawa’s industrial development pipeline is entering a new phase as it pivots toward large speculative projects, according to Avison Young’s first quarter market report.

The shift reflects growing demand for modern industrial space despite broader economic headwinds and cautious expansion sentiment among some occupiers, says the commercial real estate services firm..

The report highlights approximately 252,000 square feet of new large-bay speculative developments slated for delivery this year across two projects. These new facilities are commanding premium rents, driven by heightened demand for modern infrastructure and increased construction costs. However, expansion plans among potential tenants are mixed, as some delay decisions amid ongoing macroeconomic uncertainty.

Notable investment activity continues to underscore confidence in the localindustrial market. Properties such as 2600 Edinburgh Place, which sold for $8.9 million (or $827.90 per square foot), and 6431 Bank Street ($4.2 million, $247 psf), demonstrate ongoing investor appetite—particularly for well-located or high-quality assets.

The shift toward larger footprints comes amid persistently low industrial vacancy, which stood at just 2.2% in the first quarter, down 0.2% from the previous quarter. Net absorption reached nearly 100,000 square feet, indicating steady demand despite higher borrowing costs and rising construction expenses. Ottawa West and Ottawa South offer more availability for large users, with listings like 1275 Humber Place (40,000 sf) and 1000 Logistics Private (38,574 sf) catering to this segment.

However, supply for smaller tenants remains constrained. The small-bay segment continues to operate near full capacity, especially in Ottawa East, which accounted for 638,548 sf of the city’s total 1.1 million sf of vacant space. As a result, many smaller tenants are opting to renew leases rather than relocate, due to the lack of viable alternatives.

Asking rents continue to edge upward, with the average gross rent reaching $23.43 psf, inclusive of $7.36 in additional rent. Smaller properties are commanding a premium, with net asking rents roughly 22% higher than those for larger buildings. This trend underscores the pricing pressure driven by scarcity in the small-bay market, says Avison Young.

Overall, Ottawa’s industrial sector remains resilient in early 2025, with tight vacancy, limited small-bay supply, and strong leasing fundamentals shaping a market increasingly defined by larger speculative developments.

Photo: Avison Young

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