Ottawa industrial vacancy is at its highest point in three years, says a new Avison Young report.

Industrial vacancy rose 60 basis points year-over-year to 2%, or one million square feet, in the fourth quarter of 2023. Vacancy last reached the 2% level in the third quarter of 2022, when the rate stood at 2.2%.

The increase demonstrates that the industrial market is becoming more balanced and developers have confidence in it, said Avison Young.

The delivery of several new developments in the fourth quarter of brought more supply to the market. Meanwhile, approximately 3.1 million sf is under construction and in the preleasing stage.

“Ottawa’s development community continues to be bullish on industrial,” states the report.

The region’s industrial investment increased 84% quarter-over-quarter to $95 million. But full-year investment of $190 million was down $162 million from $352 million in 2022.

The decline was predictable given the Bank of Canada’s interest-rate policy, said Avison Young, referring to a series of increases.

Significant investment gains are not likely to occur until the third quarter quarter of 2024, the company added. The BofC is expected to introduce rate cuts by that point.